The Trans-Pacific Partnership: Expanding International Regimes

by

Thomas Goggin

A thesis submitted to the Graduate Faculty in Liberal Studies in partial fulfillment of the

requirements for the degree of Master of Arts, The City University of New York

2015

ii

© 2015

Thomas Goggin

All Rights Reserved

ii

This manuscript has been read and accepted for the

Graduate Faculty in Liberal Studies to satisfy the

thesis requirement for the degree of Master of Arts

Dr. Stephanie Golob

Date Thesis Advisor

Dr. Matthew Gold

Date Executive Officer

THE CITY UNIVERSITY OF NEW YORK

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i v

Abstract

The Trans-Pacific Partnership: Expanding International Regimes

by

Thomas Goggin

Advisor: Dr. Stephanie Golob

The Trans-Pacific Partnership (TPP) is on track to become the largest free trade agreement in

history. The multilateral negotiations comprising twelve nations across the Pacific Rim seeks to

create a robust, comprehensive trade accord for the 21st century. The regional trade deal was born

in the midst of an international climate of rapidly expanding free trade agreements. The TPP is not

merely the latest free trade agreement. Due to the size, scope, and focus on unconventional trade

issues, the TPP, led by the United States, will expand particular international regimes beyond

existing norms in two key areas: intellectual property and investor-state dispute settlements. This

expansionist approach has implications for geostrategic partnerships in the Asia-Pacific region and

emerging hegemonic trends.

Acknowledgments

First and foremost, I wish to thank Dr. Stephanie Golob for supporting me over the course

of this project and graduate program. Her thoughtful comments, patience, and intellectual

curiosity, challenged me to explore hidden assumptions while working to enhance the richness of

my argument. Without such commitment and guidance, this thesis would not have been possible.

For this, I owe a deep debt of gratitude.

Additionally, I would like to thank my parents for their endless love and sacrifice;

Michelle for providing a limitless source of inspiration; David for affording me a lifelong role

model; Perla for her adoring love and support for all of my many passions; and Bob for his

tireless ear. Although research can often feel like a solitary journey, knowing your collective

support was behind me brought comfort during the most stressful moments.

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Contents

Chapter I) Introduction ………………………………………………………………………………...……1

Historical Context ………………………………………………………………………….5

Chapter II) Literature Review ……………………………………………………………..……………….12

Chapter III) The Trans-Pacific Partnership ………………………………………………………...………20

U.S. Negotiations …………………………………………………………………………22

Intellectual Property ………………………………………………………..……………..28

Investor-State Dispute Settlements ……………………………………….………………35

Chapter IV) Geopolitics ……………………………………………………………………..……………..45

Chinese Ascendancy ……………………………………………………………………...45

Competing Agreements …………………………………………………………………..50

Climate Change and Environmental Sustainability ………………………………………51

Chapter V) Conclusion …………………………………………………………………………………….55

Bibliography …………………………………………………………………………………..57

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I) Introduction

The Trans-Pacific Partnership (TPP), a proposed multilateral trade agreement, is on track

to become the largest free trade agreement (FTA) in history. The negotiating nations – Australia,

Brunei-Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore,

Vietnam, and the United States – comprise roughly 40% of global gross domestic product (GDP).

The Asia-Pacific region comprises over 60% of U.S. trade and 25% of its foreign direct

investment.1 The regional trade deal’s ambitious agenda contains numerous objectives, such as

reducing tariffs and non-trade barriers, increasing foreign direct investment, improving access to

foreign markets, protecting intellectual property, and promoting job growth.2

In addition to its unprecedented scope, the TPP has also created more than its share of

controversy, generating stark and polarizing discourse. Its proponents have highlighted the

expected benefits of economic liberalization they claim will result from such a deal, including

rising levels of GDP, increasing trade surplus, and job creation.3 Opponents have been vehemently

critical, lambasting the TPP for its potentially destructive environmental impact, compression of

middle class wages, and infringement of labor rights.4 The debate has often been

1 Brock R. Williams, “Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis”

Congressional Research Service (2013)

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2020&context=key_workplace, Accessed May 18,

2015

2 John Whalley, “Why Do Countries Seek Regional Trade Agreements?” in The Regionalization of the World

Economy, ed. Jeffrey Frankel (Chicago: University of Chicago Press, 2013), 63-90.

http://www.nber.org/chapters/c7820.pdf, Accessed June 1, 2015

3 See William Daley, “Free Trade Is Not the Enemy” The New York Times, May 19, 2015,

http://www.nytimes.com/2015/05/19/opinion/free-trade-is-not-the-enemy.html?ref=international, Accessed August

10, 2015; Suzy Khimm, “Democrats Support Free Trade More Than Republicans Do: So Why the Big Split Over the

TPP?” The New Republic June 8, 2015. http://www.newrepublic.com/article/121989/trans-pacific-partnership-

divides-left-dems-support-free-trade, Accessed August 10, 2015

4 See Joseph Stiglitz, “Don’t Trade Away Our Health”, The New York Times, January 30, 2015,

http://www.nytimes.com/2015/01/31/opinion/dont-trade-away-our-health.html?smid=pl-share, Accessed August

10, 2015; Sen. Elizabeth Warren, “The Trans-Pacific Partnership clause everyone should oppose,” The Washington

Post, February 25, 2015, https://www.washingtonpost.com/opinions/kill-the-dispute-settlement-language-in-the-

trans-pacific-partnership/2015/02/25/ec7705a2-bd1e-11e4-b274-e5209a3bc9a9_story.html, Accessed August 10,

2015

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volatile and lacked context. For example, analysts and stakeholders have frequently compared

the TPP to the 1994 North American Free Trade Agreement (NAFTA). These comparisons,

stemming in part from NAFTA’s scope, ambition, and historical alignment of North America,

are superficially accurate. However, NAFTA’s primary goals focused on traditional trade issues

such as boosting manufacturing and agricultural production, reducing tariffs and non-trade

barriers, and improving transportation. Although NAFTA did include unconventional trade

provisions, the agreement was largely based on traditional forms of economic integration.

The imprecise comparison between the two regional agreements fails to account for many

of the Trans-Pacific Partnership’s extraordinary goals. In reality, as this thesis will contend, the

TPP seeks to broaden the definition and use of particular international regimes beyond current

normative standards. As the main driver of the TPP, the United States’ aggressive pursuit to

expand specific provisions illuminates a few of the U.S.’ primary goals for the Asia-Pacific treaty.

This expansionist approach toward international regimes such as intellectual property and

investor-state dispute settlements (ISDS), can be identified by comparing U.S. negotiators’ tactics

across free trade agreements, detailing the existing levels of normative acceptance, and careful

review of leaked text and public record. Regime expansion in each issue area has serious

geostrategic implications for the Asia-Pacific region, as well as emerging hegemonic trends.

The subsequent argument is broken into four main sections. The first section, the ensuing

introductory subchapter, provides historical context for international trade and free trade

agreements. This brief overview examines free trade, specifically from an American perspective,

painting a picture of the landscape in which the TPP negotiations have been taking place. The

evolutionary path leading up to the TPP negotiations elucidates current U.S. efforts to secure

radical expansion in unconventional trade areas.

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In the second section, the literature review presents key scholarship and themes from

relevant areas including NAFTA, TPP, regimes, and norm diffusion. Although NAFTA

literature is robust and diverse, three core themes – U.S. negotiations, economic and political

gains, and power asymmetries – are relevant to my central inquiry. Similarly, three themes from

the budding TPP literature focus on economic and trade impact, geostrategic implications, and

nontrade related issues. Additionally, international relations scholarship analyzing regime

development and norm diffusion are particularly important. While these core pieces of

scholarship are selected for their strengths, my thesis aims to fill in gaps in TPP-related

literature. The current literature largely critiques the economic, political, and strategic

implications of the agreement, yet fails to analyze U.S. efforts seeking regime expansion,

specifically in the areas of intellectual property and ISDS.

The third section focuses on the United States’ intentions and ambitions. As the largest

TPP partner, the United States’ agenda will greatly impact the overall agreement. The argument

positions NAFTA alongside the TPP to help elucidate key contributions that the Asia-Pacific

partnership is designed to make. Due to U.S. military, economic, and strategic strength, its

negotiators employ aggressive and hostile tactics hoping to gain concessions in exchange for

access to a dynamic U.S. market. Within the TPP discussions, U.S. negotiators are steadfastly

presenting proposals and arguments seeking intellectual property and investor-state regime

expansion. The level to which regime expansion materializes will be impacted by the TPP

partner’s negotiating leverage, as well as domestic political constraints. The TPP partners are

active agents with true power, yet the United States’ strategic position acts as a major force for

regime expansion. U.S. proposals aim to push international intellectual property rights beyond

current norms by broadening provisions for patentability, copyright protections, and enforcement

4

measures. Moreover, the TPP in its proposed form will further entrench ISDS by increasing the

frequency of ISDS claims, misuse of the ISDS mechanism, and infringements on state

sovereignty. Although U.S. negotiators are doggedly pursuing such policies, domestic factors

may force them into concessions in these areas. Influential domestic variables include upcoming

national elections, the conclusion of a presidential term, and congressional politics.

In the fourth and final section, three main geopolitical conditions are analyzed because of

their inevitable collision with Asia-Pacific integration led by the United States. The first of these

conditions is China’s historic ascendancy, a direct threat to American hegemony. From a U.S.

strategic viewpoint, the TPP counters this rise and bolsters relations with Washington’s allies in

the region. Secondly, the TPP must remain a desirable trade pact in order to stave off

competition from the Regional Cooperative Economic Partnership (RCEP). Membership in the

RCEP includes the Association of Southeast Asian Nations (ASEAN)5 plus Australia, China,

India, Japan, South Korea, and New Zealand. The RCEP, led by China, is less robust than the

TPP, focuses on traditional tariff and barrier issues, and stresses equitable development. The free

trade negotiations will directly compete with the TPP and impact U.S. geopolitics in the region.

Lastly, climate change may become the most significant geopolitical condition for all nations.

President Obama’s Clean Power Plan, which establishes carbon pollution limits from power

plants, details the changing landscape of energy production. 6 Energy outputs can no longer

disregard environmental consequences. The future relationship between energy and climate

change will impact Asia-Pacific integration. The agreement’s finalized environmental chapter

5 ASEAN membership includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,

Singapore, Thailand, and Vietnam.

6 The White House, Office of the Press Secretary, “Fact Sheet: President Obama to Announce Historic Carbon

Pollution Standards for Power Plants” August, 3, 2015. https://www.whitehouse.gov/the-press-

office/2015/08/03/fact-sheet-president-obama-announce-historic-carbon-pollution-standards, Accessed August 13,

2015.

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must include comprehensive and binding text on climate emissions and environmental protection

if the accord is to retain vitality throughout the century. These three geopolitical issues will

directly impact the Trans-Pacific Partnership’s implementation and greater regional integration.

Historical Context

Placing the Trans-Pacific Partnership in a historical context unveils shifting ideological

patterns while highlighting trends in trade promotion. From 1860 – 1913, international trade

lacked any form of a cohesive agenda. Most bilateral negotiations focused primarily on most-

favored-nation (MFN) clauses providing an egalitarian platform for trade; states were free to

decide tariff levels, as long as the same tariff was granted to all partners.7 This prewar period

experienced significant growth in international trade. Despite increasing integration, the outbreak

of World War I, the Great Depression, and World War II severely disrupted previous bilateral

trade practices. After 1932, in spite of increases in overall output, trade could not keep pace with

economic growth due in part to protectionist policies such as higher tariffs, import quotas, and

licensing requirements.8 Postwar liberal architects based future policy decisions on the

relationship between peace and economic integration. The General Agreement on Trade and

Tariffs (GATT) came into existence in 1948 and provided consensus on issues such as MFN,

internal taxation and regulation, anti-dumping measures and duties, and the elimination of

quantitative restrictions.9 The GATT did help reduce tariffs in the postwar period in many

sectors, but some industries such as agriculture and textiles retained various protectionist

measures.

7 Douglas Irwin, “The GATT in Historical Perspective.” The American Economic Review, 85.2 (1995): 323–28.

http://www.dartmouth.edu/~dirwin/docs/GATTHP.pdf, Accessed June 5, 2015

8 Ibid, p. 323.

9 World Trade Organization, The General Agreement on Trades and Tariffs. (1986)

https://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf, Accessed March 22, 2015.

6

The GATT’s post-World War II economic reconstruction efforts greatly reduced world

trade barriers.10 The GATT’s nine Rounds, largely a forum for trade negotiations, provided a

platform for robust dialogue and debate leading to cooperation.11 After almost four decades of

work, the GATT’s evolution into a complete organization was clear, and the World Trade

Organization (WTO) was established in 1995. The WTO builds on the work of the GATT by

adding areas of focus such as dispute settlement mechanisms. U.S. hegemony played a principal

role in ensuring that each mechanism helped foster an environment favorable for economic

liberalization. Each international institution, the GATT and WTO, underscores U.S. efforts to

normalize multilateral trade deals while increasing market access. This institutional growth

favored norms and rules which promoted an American hegemonic order. The development of

international institutions in the post-World War II era was a primary mechanism for helping open

borders, while striving for peace through economic integration.

The contemporary era of U.S. trade policy begins in the 1980s with the 1988 Canada-

United States FTA. This agreement helped reduce tariffs, eliminated barriers to trade, and

became the precursor to NAFTA. Negotiations for North American integration began under the

administrations of George H.W. Bush, Carlos Salinas de Gortari, and Brian Mulroney. When

Bush ceremonially signed the agreement, he described a hemisphere “of peace, where trade

flows freely, prosperity is shared, the rule of law is respected, and the gifts of human knowledge

are harnessed for all.”12 He invoked images of Simon Bolivar, the realization of Bolivar’s

unification attempts, and the amalgamation of a hemisphere. During the closing months of 1992,

10 Judith Goldstein, Douglas Rivers, and Michael Tomz, “Institutions in International Relations: Understanding the

Effects of the GATT and the WTO on World Trade” International Organization 61.1 (2007): 37-67.

https://web.stanford.edu/~tomz/pubs/GRT_IO2007.pdf, Accessed August 13, 2015

11 Irwin, 6.

12 The American Presidency Project, December 17, 1992.

http://www.presidency.ucsb.edu/ws/index.php?pid=21784&st=&st1=, Accessed April 4, 2015

Bush lost his reelection campaign to Bill Clinton. As a free trade advocate, Clinton gave

leadership to the final stages of negotiation. Due to intense opposition from Congressional

Democrats over environmental and labor issues, Clinton negotiated side accords to ease

Congressional ratification.13 On December 8, 1993, Clinton signed the NAFTA text. The treaty

came into force on January 1, 1994.

The discourse around the NAFTA negotiations and implementation was rancorous.

Public outrage, such as the Zapatista uprising in 1994 and Seattle’s 1999 protests, demonstrated

specific furor over NAFTA, globalization, and free trade. Led by rebel leader Subcommander

Marcos in the state of Chiapas, the uprising quickly became international news.14 The revolt of

an armed group of farmers highlighted the plight of Mexico’s native population.15 This dramatic

event brought increasingly more cognizance to the destructive effects of globalization. In

addition, public awareness of the negotiations grew as a result of the volatile dialogue in the

American political system. In the 1992 presidential election, Ross Perot secured nearly 20% of

votes cast, the most of any third party candidate since 1912.16 Perot’s anti-NAFTA platform

typified such volatility by describing American job losses as “a giant sucking sound.”17

The degree to which NAFTA has succeeded has been exhaustively argued. Trade on the

continent has substantially increased since 1994. Mexico and Canada are two of the United

States largest trading partners. In 2014, both countries imported over $500 billion of U.S.

13 Bill Clinton, “Remarks on the Signing of NAFTA” The Miller Center. December 8, 1993.

http://millercenter.org/president/speeches/speech-3927, Accessed August 16, 2015

14 Anthony DePalma, “Press in Mexico Docile on Revolt.” The New York Times, March 6, 1994, sec. World.

http://www.nytimes.com/1994/03/06/world/press-in-mexico-docile-on-revolt.html. Accessed June 12, 2015

15 Aileen Yoo, “The Call of Zapata.” The Washington Post, Update: August, 1998.

http://www.washingtonpost.com/wp-srv/inatl/longterm/mexico/overview/rebellion.htm, Accessed June 12, 2015. 16 Ted G. Jelen, “The Perot Campaign in Theoretical Perspective.” in Ross for Boss: The Perot Phenomenon and

Beyond, ed. Ted G. Jelen (Albany: State University of New York, 2001): 1-13

http://ahd1113.activehost.com/pdf/60295.pdf, Accessed August 24, 2015.

17 Gary, Hufbauer, “Ross Perot Was Wrong About NAFTA” The New York Times, November 25, 2013

http://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/ross-perot-was-wrong-about-

nafta, August 16, 2015

7

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products; the United States imported over $600 billion of Canadian and Mexican products.18

Conversely, many point to increased income inequality, the compression of middle class wages,

and increased carbon emissions as evidence of NAFTA’s debilitating effects.19 Despite these

diverging views on North American integration’s success, the agreement helped lay a foundation

for future trade agreements throughout the world.

Since NAFTA, the United States as negotiated numerous FTAs with countries across the

world such as Jordan, Australia, Chile, Singapore, Bahrain, Morocco, Oman, Peru, Dominican

Republic, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Colombia, and

South Korea. Under the George W. Bush administration, numerous FTAs were commenced.

Receiving Trade Promotion Authority (TPA or “fast track authority”) from Congress in 2002,

President Bush quickened the pace of the negotiations.20 Aggressive negotiations of FTAs have

not been limited to Republican Presidents and House of Representatives majorities. President

Barack Obama and the 112th Congress approved bills for FTAs with Panama, Colombia, and

South Korea despite concerns of violence towards union officials, taxation regimes, and the auto

trade, respectively.21 Through active leadership in the GATT and WTO, the United States has

not only passed FTAs but also helped foster a global environment toward greater integration.

The WTO reports that roughly 200 FTAs are in place around the world.22 The growth of

international trade agreements has helped standardize international regimes and norms under a

U.S.-led free trade agenda.

18Williams (2013), p. 14.

19 David Rosnick, “Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages”

Center for Economic and Policy Research (2013) http://www.cepr.net/documents/publications/TPP-2013-09.pdf,

Accessed June 10, 2015.

20 William H. Cooper, “Free Trade Agreements: Impact on U.S. Trade and Implications for U.S. Trade Policy”

Congressional Research Service, (2014): p 5,

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2252&context=key_workplace, Accessed April

20, 2015.

21 Ibid.

22 Williams (2013), p4.

9

The origins of the TPP date back over a decade to the Trans-Pacific Strategic Economic

Partnership comprising Chile, Singapore, and New Zealand. Brunei later joined the negotiations,

which came to be known as the P-4 agreement. On September 22, 2008, President Bush alerted

Congress of his intentions to begin dialogue with the P-4 for a free trade deal. Three months later

Australia, Peru and Vietnam would declare their intentions to participate as well.23 President

Obama in his first year in office, despite having opposed many of the Bush administration’s

policies, formally announced plans to partake in the negotiation process for the Trans-Pacific

Partnership on November 14, 2009. While visiting Japan’s Suntory Hall, Obama first announced

that, “the United States will also be engaging with the Trans-Pacific Partnership countries with

the goal of shaping a regional agreement that will have broad-based membership and the

standards worthy of a 21st century trade agreement.”24 Canada, Mexico, and Malaysia followed

the United States, with Japan being the last partner to join the negotiations.

Although the final text of the Trans-Pacific Partnership has not been finalized, and

finished chapters have not been released, there are some substantive details known to the public.

A few of the current negotiating topics include market access for goods and services, investment

and financial services, and intellectual property rights.25 The agreement is designed to operate as

a living agreement allowing new partners to join during the negotiation or accede at the

conclusion of the process.26 Additionally, like previous U.S. FTAs, the proposed structural

design includes a dispute settlement mechanism; disputing parties are encouraged to host initial

consultations and establish a dispute settlement panel consisting of three arbiters.27

23 Ibid, p.1

24 “Remarks by President Barack Obama at Suntory Hall.” Whitehouse.gov, https://www.whitehouse.gov/the-press-

office/remarks-president-barack-obama-suntory-hall, Accessed June 12, 2015.

25 Office of the United States Trade Representative, “Outlines of TPP”. https://ustr.gov/tpp/outlines-of-TPP,

Accessed August, 10, 2015.

26 Ibid.

27 Ibid.

1 0

Two of the agreement’s more controversial components are labor and the environment.

Both issues, added to NAFTA as side agreements, are included in recent FTAs. Special reports

from the United States Trade Representative (USTR) emphasize the abolition of forced and child

labor, elimination of discrimination in employment, and consolidation of commitments from

countries not to ignore labor rights.28 The proposed environmental chapter asks countries to

enforce their own laws while abiding by multilateral environmental agreements. Environmental

advocates have expressed early concern over leaked drafts of the environmental chapter.29

Alongside substantive knowledge of the agreement, public records give insight into the

vested parties and interests that have much to gain from specific provisions in the TPP. For

example, in a letter to the USTR on November 22, 2010, the Pharmaceutical Research and

Manufacturers of America (PhRMA) detailed their association’s needs in relation to Malaysia’s

participation, writing, “America’s research-based biopharmaceutical companies seek a

commercial and regulatory environment that: (1) recognizes the value of medical innovation; (2)

provides strong protection for intellectual property rights; and (3) ensures timely, transparent, and

science-based regulatory policies that accord with common international practices.”30 Chapters

related to intellectual property rights and pharmaceutical investment protections are present in the

proposed drafts. In addition, speeches given by President Obama describe actions taken to

generate support among vested groups, including statements to the Business

28 United States Trade Representative, “Standing Up for Workers: Promoting Labor Rights through Trade” (2015)

https://ustr.gov/sites/default/files/USTR%20DOL%20Trade%20-%20Labor%20Report%20-%20Final.pdf,

Accessed July 30, 2015.

29 “Green Groups: Leaked Trans-Pacific Partnership Environment Chapter Unacceptable.” Sierra Club National.

http://content.sierraclub.org/press-releases/2014/01/green-groups-leaked-trans-pacific-partnership-environment-

chapter, Accessed July 31, 2015.

30 Docket Wrench - Document: USTR-2010-0031-0014.” Docket Wrench.

http://docketwrench.sunlightfoundation.com/document/USTR-2010-0031-0014. Accessed July 30, 2015.

1 1

Roundtable,31 an association of chief executive officers of major U.S. companies designed to

promote economic public policy; remarks to US-ASEAN leaders;32 and the APEC CEO

Summit.33 These speeches and open letters provide insight into issues of priority for

corporations and the USTR, as well as demonstrate the disproportionate access granted to

business leaders during early negotiating periods through direct stakeholder engagements.

The Trans-Pacific Partnership is a 21st century trade agreement with roots dating back

over two decades. From a United States perspective, while the TPP is the most recent initiative to

further economic liberalization, it is not merely another international trade agreement. The United

States already has FTA agreements with 6 of 11 TPP partners. The remaining TPP partners –

Brunei, Japan, Malaysia, New Zealand, and Vietnam – will become increasingly interconnected

with the United States by signing the regional free trade deal. By binding nations in an

international treaty with the potential for countries to accede, the U.S. hopes to advance

unconventional trade issues such as intellectual property and ISDS regimes in their own image.

Ultimately, the Asia-Pacific agreement’s focus on nontraditional trade issues pushes beyond

provisions and norms of NAFTA and subsequent FTAs. By pursuing policies to expand existing

international regimes, the TPP will must be recognized for its distinct potentiality.

31“Remarks by the President at the Business Roundtable.” Whitehouse.gov. https://www.whitehouse.gov/the-press-

office/2014/12/03/remarks-president-business-roundtable, Accessed May 5, 2015.

32 “Remarks by President Obama at Young Southeast Asian Leaders Initiative Town Hall, 11/14/14.”

Whitehouse.gov. https://www.whitehouse.gov/the-press-office/2014/11/14/remarks-president-obama-young-

southeast-asian-leaders-initiative-town-ha, Accessed July 30, 2015.

33 “Remarks by President Obama at APEC CEO Summit.” Whitehouse.gov. https://www.whitehouse.gov/the-press-

office/2014/11/10/remarks-president-obama-apec-ceo-summit, Accessed July 30, 2015.

1 2

Chapter II) Literature Review

In this chapter, I will draw upon a wide range of literatures – NAFTA, TPP, regimes, and

normative diffusion – to support my contention that the TPP is a norm-expanding trade

agreement. NAFTA’s divergent, yet sizable body of literature is useful in three key areas:

economic and trade impact, geostrategic implications, and nontrade related issues. Extrapolating

these three themes appropriately frames the TPP’s existing environment while highlighting the

United States attempts to expand intellectual property and ISDS regimes. The TPP literature,

while less robust due to the agreement’s infancy, has similar analytic strands throughout the

current body of scholarly work such as economic and trade impact, geostrategic implications,

and nontrade related issues. Moreover, international relations scholarship examining regime

development and norm diffusion are particularly relevant and help illustrate Washington’s

expansionist intentions.

The scholarly and policy-oriented literatures detailing North American integration,

implementation, and impact are extensive and diverse. For over twenty years, NAFTA has

remained a quintessential topic for work relating to economic integration, immigration,

globalization and free trade, climate science, and a host of related disciplines. Although

scholarship on NAFTA has developed for over two decades, three core themes stand out as most

relevant to my argument: U.S. negotiations,34 economic and political implications,35 and

34 See David Rankin, (2004) “Borderline Interest or Identity? American and Canadian Opinion on the North

American Free Trade Agreement” Comparative Politics. 36.3 (2004)

http://www.jstor.org/stable/4150134?seq=1#page_scan_tab_contents, Accessed July 30, 2015, for U.S. and

Canadian public perceptions on significance of NAFTA’s implementation; Bruce Ackerman and David Golove, “Is

NAFTA Constitutional” Harvard Law Review 108.4 (1995).

http://www.jstor.org/stable/1341958?seq=1#page_scan_tab_contents, Accessed July 31, 2015, for historical

perspective on domestic legislative changes leading up to NAFTA;

35 See Gary C. Hufbauer and Jeffrey Schott, “NAFTA Revisited: Achievements and Challenges” Washington, DC:

Peterson Institute for International Economics, (2005)

http://iie.com/publications/papers/paper.cfm?ResearchID=898, Accessed May 28, 2015, for comprehensive analysis

on employment, trade and investment, and labor and environmental impact.

1 3

asymmetrical power dynamics.36 First, Cameron and Tomlin retrace the inner workings of the

NAFTA negotiations by detailing the United States’ willingness to aggressively negotiate early

and often.37 U.S. negotiators were able to use the size of the American market as leverage, while

winning favorable concessions due to the potential of Congressional obstruction. Additionally,

domestic factors such as the desire to secure an agreement before the 1992 elections impacted

U.S. negotiations.

Second, Hufbauer, Schott, and Orejas provide a comprehensive analysis of the economic

outcomes of NAFTA.38 North American integration did achieve many of its objectives including

increased trade and cooperation among the three nations, yet failed in some sectors including

trucking and lumber. They highlight key economic indicators of increased economic integration,

yet stress the agreements shortcomings in areas such as immigration, labor, and environmental

degradation. Villareal and Ferguson analyze NAFTA’s economic impact two decades after its

completion.39 They note the tremendous growth in trade between Mexico and the United States,

and increasing imports in crude petroleum and motor vehicles. They highlight the difficulty in

analyzing NAFTA because many transnational integrations were happening concurrently,

however its importance to subsequent FTAs is stark. NAFTA’s obligations presented a framework

and environment for subsequent trade agreements to operate in.

36 Tom Long, “Echoes of 1992: The NAFTA Negotiations and North America Now” Wilson Center (2014)

http://www.wilsoncenter.org/sites/default/files/Long_NAFTA_and_Now_0.pdf, Accessed May 24, 2015

37 See Maxwell Cameron and Brian Tomlin, NAFTA: How the Deal Was Done. (Ithaca, NY: Cornell University

Press, 2000) Print.

38 Gary C. Hufbauer, Jeffrey J. Schott, and Diana Orejas, “NAFTA Revisited: Achievements and Challenges”

(Washington, DC: Peterson Institute for International Economics, 2005) Print.

39 M. Angeles Villareal and Ian Ferguson, “NAFTA at 20: Overview and Trade Effects” (Washington, DC:

Congressional Research Service, 2014)

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2272&context=key_workplace, Accessed June 2,

2015

1 4

Third, Long presents a historical perspective on NAFTA, Mexico’s political system, and

asymmetry in the North American relationship.40 He highlights Salinas’ process to guide Mexico

through a landscape of evolving international trading blocs. Due to Mexico’s perilous economic

condition and a global shift toward regional trading blocs, Salinas was initially forced to seek out

alternative trading partners including Europe and Asia. Ultimately, Salinas found partners in the

existing North American trading alliance of Canada and the United States. Although power

asymmetries between Mexico and the United States were great, Salinas’ deep desire for

economic liberalization helped develop a strong relationship with President Bush. Additionally,

Cameron and Tomlin highlight the significant gaps in asymmetries between Mexico and the

United States. This asymmetry enables both Mexico and the United States to leverage areas of

power to further concessions on energy and agriculture.41

Although the Trans-Pacific Partnership has recently become a popular topic among

editorialists and commentators, the negotiations’ ongoing nature have made academic

scholarship less entrenched on the issue. The TPP literature is often policy-oriented and

analytically based, focusing on the economic impact for varying bodies. Due to the ongoing

nature of the TPP negotiations, researchers face different variables and circumstances depending

on the year of authorship. Despite the uncertainty of conditions, there are three critical areas of

TPP literature: economic and trade impact, geostrategic implications, and nontrade related issues.

First, due to the size of the Trans-Pacific Partnership analysis of economic and trade

related issues are critical. Meredith Lewis42 argues that the United States and the USTR must

take on a leadership role and offer substantial incentives for Asia-Pacific nations to join the

40 Long, 2014.

41 Cameron and Tomlin (2000)

42 Meredith Kolsky Lewis, “The Trans-Pacific Partnership: New Paradigm or Wolf in Sheep’s Clothing?, Boston

College International and Comparative Law Review 27 (2011) http://lawdigitalcommons.bc.edu/iclr/vol34/iss1/3/,

Accessed May 7, 2015.

1 5

agreement. If the partnership is not sufficiently attractive, she believes the U.S. will risk losing

countries to alternative bilateral or multilateral models. She positions the TPP as an opportunity

to simplify the “spaghetti bowl” of FTAs. Furthermore, the TPP presents a chance to formalize

U.S.-Asia economic integration, while providing avenues for additional countries to join.

Additional scholarship on the United States and the TPP comes from two extensive reports by

the Congressional Research Service (CRS). The 2013 report43 is a comparative trade and

economic analysis reviewing the current economic relationship between the TPP partners.

Detailing trade and economic conditions, the report emphasizes the diversity of the TPP partners

and potential areas of opportunity such as Japan’s entry. Although Japan-U.S. trade is

considerable, there is no current FTA formalizing relations. The 2015 CRS report 44 analyzes the

core negotiating issues including market access, trade rules, and Congressional concerns.

Second, an alternative lens to analyze the Trans-Pacific Partnership is through

geopolitical and strategic importance. One of the fundamental geopolitical concerns is China’s

rise as an economic and political force. Chinese ascendency alters a once unipolar world forcing

the United States to make difficult decisions. Tellis posits that there are four options: continue the

diplomatic course while recognizing the positives from China’s ascendency; negotiate future

Sino-American agreements to foster additional economic integration; stymie Chinese success

through containment; and outgrow the Chinese to maintain American supremacy.45 Tellis claims

the fourth option is likely the best, but can only take place by improving efficiency and

innovation, enhancing U.S. commitment to military domination, and supporting the power of

43 Williams, 2013.

44 Ian Ferguson, Mark McMinimy, and Brock R. Williams, “The Trans-Pacific Partnership (TPP) Negotiations and

Issues for Congress” Congressional Research Service (2015) http://photos.state.gov/libraries/vietnam/8621/pdf-

forms/tpp-crsreport032015.pdf, Accessed May 26, 2015.

45 Ashley Tellis, “The Geopolitics of the TTIP and TPP” Adelphi Series, 54:450 (2014): 93-120.

http://www.tandfonline.com/doi/full/10.1080/19445571.2014.1019720#abstract, Accessed May 26, 2015

1 6

rival nations such as Japan, India, and Vietnam. From this perspective, global trade and

economic liberalization must strengthen U.S. power.

Additionally, authors such as Li and Whalley46 explore the potential effects of

participant and non-participant countries. China can gain significant economic benefits by

participating in the TPP negotiations. However, as the agreement stands, China is positioned to

lose out economically in terms of welfare (although the effects are not large), while the TPP

participants are situated to benefit. Japanese participation will compound lost revenue if Beijing

remains on the sidelines. The literature on China’s role in the TPP negotiations is important.

With over a decade of unprecedented economic growth, China will remain a regional hegemonic

power. Beijing’s response will produce invariable and unintended consequences for the TPP’s

implementation.

Third, the final theme of TPP literature is in nontrade related issues. Often this includes

reports from non-profit or activist groups like Public Citizen,47 Sierra Club, 48AFL-CIO,49 and

the Center for Economic and Policy Research.50 Each organization has released reports relating

to areas of specialization. The Sierra Club has highlighted the necessary expansion of fossil fuels

due to the TPP’s implementation. The AFL-CIO has repeatedly positioned FTAs like NAFTA

and the TPP against labor rights. The U.S. government ignores human rights abuses and

violation of basic labor standards when participating in FTAs with countries such as Mexico,

Brunei, and Vietnam. Public Citizen actively opposed the TPP particulars such as the

46 Chunding Li and John Whalley. “China and the Trans-Pacific Partnership: a Numerical Simulation Assessment of

the Effects Involved” The World Economy. 37.2 (2014)

http://onlinelibrary.wiley.com/doi/10.1111/twec.12123/abstract, Accessed May 25, 2015. 47 Public Citizen, “Table of Foreign Investor-State Cases and Claims under NAFTA and other U.S. “Trade” Deals.”

(2015) http://www.citizen.org/documents/investor-state-chart.pdf, Accessed July 14, 2015

48 Sierra Club, “Analysis of Leaked Environmental Chapter Consolidated Text” (2014)

http://action.sierraclub.org/site/DocServer/TPP_Enviro_Analysis.pdf?docID=14842, Accessed May 6, 2015

49 AFL-CIO, “The Trans-Pacific Partnership: Four Countries that Don’t Comply with U.S. Trade Law”

http://www.aflcio.org/content/download/150491/3811471/file/TPPreport-NO+BUG.pdf, Accessed May 19, 2015.

50 See David Rosnick, (2013).

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procurement chapter enabling foreign firms operating in the U.S. equal access to government

contracts. Research centers like the Center for Economic and Policy Research have analyzed the

economic impact on U.S. wages. Median wage earners are likely to be negatively impacted by

any form of agreement. U.S. economic gains are likely to be minimal (.13 percent of GDP by

2025) while top income earners will disproportionately benefit.

International relations literature on state cooperation, regimes, and norms provides key

insight for ways in which states understand negotiations. Regimes can be defined, according to

Stephen Krasner, as “principles, norms, rules, and decision-making procedures around which

actor expectations converge in a given issue-area.”51 Robert Axelrod and Robert Keohane

identify the formation of regimes as a method for international cooperation.52 Regimes alter

transaction costs for states, helping provide information while reducing uncertainty.

Additionally, regimes increase reciprocity among partners making defection much more unlikely

due to greater consequences. They write, “setting up international regimes, and attempting to

gain acceptance for new norms are all attempts to change the context within which actors operate

by changing the very structure of their interaction.”53

Additionally, scholarship on norm diffusion offers important ways to consider regime

development. Finnemore and Sikkink’s work on norm ‘life cycle’ is understood as a three stage

process: norm emergence, norm acceptance or norm cascading, and internalization.54 Norm

emergence, or when a norm first appears, is advanced by norm entrepreneurs attempting to

51 Stephen Krasner, “Structural causes and regime consequences: regimes as intervening variables” International

Organization, 36.2 (1982). http://www.jstor.org/stable/2706520?seq=1#page_scan_tab_contents, Accessed August

17, 2015

52 Robert Axelrod and Robert O. Keohane “Achieving Cooperation under Anarchy: Strategies and Institutions”

World Politics 38.1(1985) 226-265. http://www.jstor.org/stable/2010357, Accessed August 17, 2015

53 Ibid, 251.

54 Martha Finnemore & Kathryn Sikkink, “International Norm Dynamics and Political Change” International

Organization 52.4 (1998) p. 890 – 899. http://home.gwu.edu/~finnemor/articles/1998_norms_io.pdf, Accessed

August 24, 2015

18

persuade states to adopt specific policy. Norm cascades can be understood as an inflection point

in which a critical mass of state actors adopt a policy. The third phase, internalization, takes place

when a norm becomes widely accepted across a populace or nation.55 The process by which

norms manifest or embed within regimes elucidates key mechanisms in the United States’ efforts

to utilize the TPP for regime expansion.

Currently, comparisons are drawn describing the TPP as a bloated, swollen version of

NAFTA.56 Despite similarities in association, equating the TPP as merely a larger version of

integration is inaccurate. I aim to fill in gaps in the current scholarship analyzing the Trans-

Pacific Partnership. The overwhelming bulk of the literature on TPP centers on potential

economic impact or geopolitical consequences. There are holes in the current TPP scholarship

which do not analyze the agreement as an expansion of international regimes, specifically

intellectual property and ISDS. I will examine the United States’ TPP-strategy on

unconventional trade issues and its intent to broaden intellectual property and ISDS international

regimes. This contribution to TPP scholarship adds to the literature on cooperation, transaction

costs, and norm diffusion.

The following chapter will compare U.S. negotiating efforts during NAFTA and the TPP.

The analysis reveals the TPP’s main focus to be on nonconventional trade issues, highlighting

regime expansion to be a high priority for U.S. negotiators. Negotiations begin with a broad

agenda and rigid tactical positions. However, as domestic factors’ importance increase

concessions become more likely. Additionally, subchapters focusing on intellectual property and

ISDS explain the historical development of these regimes. Key focus is given to methods

through which the regimes will expand, due to the U.S. hegemonic efforts. The intellectual

55 Ibid.

56 Public Citizen,“NAFTA Terms Replicated in TPP” http://www.citizen.org/documents/tpp-nafta-on-steroids-

infographic.pdf, Accessed June 30, 2015

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property regime’s textual substance will increase in areas of copyrights, patentability, and

enforcement. The ISDS regime will be strengthened by locking in additional nations, increasing

areas of protection, and growing misuse of the mechanism by corporations.

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Chapter III: Trans-Pacific Partnership

In the fall of 2011, President Obama announced a shift in the United States’ strategic focus

toward the Asia-Pacific region on military and economic matters. Inheriting a foreign policy

predominantly fixated on the Middle East, the Obama administration set out on a renewed path to

align current government resources with future priorities. In 2011, Secretary of State Hillary

Clinton penned a piece for Foreign Policy describing this regional policy as a “pivot point.”57

Clinton further articulated interest in expanding economic liberalization through agreements such

as the Korea-U.S. Free Trade Agreement. This rebalancing became a cornerstone for the Obama

administration’s foreign policy objectives, and the principal economic and foreign policy

component of the ‘pivot to Asia’ is the Trans-Pacific Partnership.

The Trans-Pacific Partnership is often compared to NAFTA because of the particularly

ambitious nature of the two agreements. Each deal, exhaustively pursued by U.S. officials,

stressed similar sector concerns such as trade in goods and services, tariffs and trade barriers,

government procurement, and investment. During the early 1990s, NAFTA’s drafters aimed to

unite North America in the most significant regional trade deal in U.S. history. Today, the TPP’s

creators have been equally ambitious with their inclusion of parallel components relating to goods

and services, tariffs, and market access. However, despite these commonalities which are often

noted,58 the TPP dwarfs all prior U.S. trade agreements in scope and ambition. An analysis of

trends within U.S. free trade negotiations beginning with NAFTA, as well as a dissection of

57 Hillary Clinton. “America’s Pacific Century.” Foreign Policy. October, 11, 2011

http://foreignpolicy.com/2011/10/11/americas-pacific-century. Accessed June 24, 2015

58 For disparate iterations of NAFTA-TPP critique see: Joe Nocera, “Don’t Blame Nafta.” The New York Times,

January 23, 2015; “Obama’s Cognitive Dissonance on Trade.” The New Yorker. May 14, 2015; “TPP Versus

NAFTA.” Paul Krugman Blog. June 17, 2015; Neil King, “Pacific Trade Pact Revives Ghosts of Nafta Jobs Fight”

The Wall Street Journal. April 24, 2015. Byron, Tau “Obama on Trade Deals: TPP Is Nothing Like NAFTA” The

Wall Street Journal. April 23, 2015.

2 1

emerging issues or geopolitical developments, illuminates the TPP as a novel and extraordinary

twenty-first century agreement.

The subsequent chapter is broken into three parts focusing on three dimensions that

underscore how the TPP dwarfs all prior U.S. trade agreements (including NAFTA) in scope and

ambition: U.S. negotiating tactics, intellectual property, and investor-state dispute settlements.

First, although U.S. negotiating styles in NAFTA and the TPP are similar in many respects,

points of divergence highlight TPP’s enhanced role in regime expansion. In both cases, due to

overwhelming economic, military, and strategic advantages, initial U.S. negotiating methodology

is built on aggression, rigidity, and ambition. Numerous domestic factors, including national

elections, political legacy, and Congressional discord alter power alignments in international

trade negotiations. Yet, despite aggressive stances during negotiations, myriad domestic

influences have led negotiators to become willing to grant important concessions on specific

issues. In spite of demonstrated flexibility, the steadfast positions on specific TPP issues

highlights the agreement’s expansive nature. For example, during current TPP negotiations, U.S.

concessions on controversial pharmaceutical pricing while simultaneously failing to agree on

intellectual property or ISDS issues highlights the heightened level of importance these areas

hold for the Obama administration. Although similar hostile negotiation styles are implemented

across the two agreements, U.S. rigidity in negotiating these two issue areas help reveal the

TPP’s focus on regime expansion.

Second, while NAFTA’s primary focus centered on North American economic

integration, the elucidation of the TPP’s key significance requires a detailed analysis of non-

traditional trade areas. NAFTA certainly contained provisions addressing intellectual property,

but the agreement was largely about trade and economic liberalization. The TPP is much less a

2 2

traditional trade deal, as only a handful of the proposed 29 chapters pertain to classical trade

issues. These additional functional areas which are protected by intellectual property rights will

further the international regime’s scope. Based on early leaked documents, U.S. negotiators are

attempting to enhance the normative underpinnings of intellectual property. The United States is

seeking to expand the intellectual property regime in a few critical areas, including copyright

protection, patentability, and enforcement. Additionally, by framing the text as a “living

agreement”59 enabling countries to accede after negotiations are complete, the Asia-Pacific

agreement will bind other countries to the normative underpinnings of the regime.

Lastly, the United States insistence on strong investor protections aims to strengthen the existing

investor-state regime. Although Chapter XI was a key component of NAFTA, the subsequent

role of investor protections has created a markedly different environment in which the TPP will

operate. The investor-state regime will be strengthened through a variety of avenues such as the

increasing utilization of the regime’s mechanisms. The creation of a living agreement will bind

additional states to the mechanisms. Moreover, investor-state dispute settlements have evolved

beyond a mere bilateral protection of foreign capital to an international regime engrossing

exceedingly more complex areas such as e-commerce, state-owned enterprises, and small- and

medium-sized business. The agreement’s focus on nonconventional trade issues will further

activate and entrench the investor-state regime.

United States Negotiations

Comparisons between NAFTA and the TPP are accurate in terms of the asymmetrical

power distribution among participating nations. The North American partnership consists of

59 Office of the United States Trade Representative, Executive Office of the President, “Outlines of TPP”,

https://ustr.gov/tpp/outlines-of-TPP, Accessed August 22, 2015.

2 3

countries with fundamentally unequal power dynamics. In 1995, the United States contained

close to 90% of North America’s GDP.60 In the current twelve nation negotiations, the United

States accounts for nearly 60% of the TPP’s GDP, or $15.5 trillion.61 Despite slightly less

economic weight, the U.S. is still a main driver of the TPP negotiations. Due to asymmetries in

power, U.S. negotiating tactics have followed similar trajectories. Having significant negotiating

advantages in economic and technological capacity, the United States has maintained unrelenting

and aggressive stances in early negotiating periods. The U.S.’ persistently dogged positions

make consensus difficult and elucidate critical issue areas, such as intellectual property and

investor-state dispute settlements.

At the same time, domestic concerns play a vital role in U.S. negotiators’ tactics and

stances. As election cycles near, and the need to win approval from the electorate increases, U.S.

negotiators are willing to concede points of contention. Congressional approval granting

President Obama Trade Promotion Authority (TPA or fast track authority) typifies domestic

concerns and enhances the speed of implementation. The remarkable blending of party lines

enabling fast track authority highlights domestic priorities, especially in light of a historically

sluggish Congress.

At the beginning of NAFTA negotiations diverging strategic, economic, and political

positions produced varying levels of confidence and urgency among the negotiating countries.

Having recently completed the 1988 Canada-United States FTA, Mulroney was assured in the

Canadian position within the hemisphere. The Canadian aim was to maintain the existing

agreement and, if possible, build on the FTA. In contrast, the Salinas administration felt an

60 Cameron and Tomlin, (2000)

61 Joshua Meltzer, “The Trans-Pacific Partnership Agreement, the Environment and Climate Change.” The

Brookings Institution. http://www.brookings.edu/research/papers/2013/09/trans-pacific-partnership-meltzer.

Accessed June 26, 2015

2 4

urgency to negotiate NAFTA. The Mexican debt crises and shifting domestic ideology

reinforced an urgency to finalize a trade agreement. Mexico was willing to make numerous

concessions during the negotiations; from the Mexican vantage point, the accord seemed to be

the best option.

The United States found itself in a much different negotiating position. Due to its

advantages in economic heft, technology, military, and strategic position, the U.S. maintained

steadfast stances in part because it did not truly need NAFTA to achieve its trade objectives.62

Negotiators unrelentingly pushed for reforms such as procurement and intellectual property

provisions. U.S. negotiators wanted to improve U.S. firms’ access to government contracts, and

were especially interested in Petróleos Mexicanos (PEMEX), the state-owned petroleum

company. While the Mexicans proposed access to 30% of contracts, the Americans pushed back

for 50% and guarantees on the level of exports. From the outset of negotiations, the United States

resolutely pushed for strong intellectual property protections on patents, trademarks, and

copyrights.63

Even with asymmetrical power distributions, the United States’ steadfast approach

became malleable due to domestic constraints. As the 1992 Presidential election came near, the

Bush administration’s need for a regional trade deal became more apparent. Despite a successful

campaign in the Gulf War, President Bush was attacked along domestic lines. Bill Clinton’s

presidential campaign in 1992 memorialized this sentiment arguing, “It’s the economy, stupid”.64

The likelihood of U.S. concessions increased as “American impatience was exploited more by

the Canadians than the Mexicans, nevertheless U.S. haste in August was one factor that

62 Cameron & Tomlin, 233.

63 Ibid, 179.

64 Ibid, 179.

2 5

contributed to Mexico’s ability to avoid concessions in energy.”65 Despite winning hard-fought

concessions from Mexico on issues like government procurement and strong intellectual property

protections, lead negotiator Carla Hills and her U.S. team conceded issues like guarantees on

PEMEX export levels. 66 This negotiating transformation is in large part attributed to a domestic

political concern of completing a deal before the Republican convention.

The current Asia-Pacific negotiations have followed a similar trajectory of rigidity and

aggression, followed by haste and concessions linked to domestic political concerns. However,

by examining contentious issue areas and observing which issues the U.S. negotiators will not

concede, U.S. intentions to strengthen particular regimes becomes clear. For the United States,

intellectual property is a prime issue area affecting a wide swath of U.S. firms. Patent protection

for pharmaceutical companies is a big concern among the TPP partners.67 The reproduction of

generic or unregulated drugs erodes the bottom-line of U.S. drug companies. U.S negotiators

have doggedly held to strong intellectual property protections, including longer patent terms for

innovative products, patent holders’ right to act against the introduction of a similar product, and

limitations on domestic flexibility to control prices of medicine within their territory.68

Pharmaceutical pricing is one of the more contentious demands, as critics have maintained that it

will provide higher reimbursement rates for American pharmaceutical companies at the expense

of consumers.

Meanwhile, U.S. negotiators of the Trans-Pacific Partnership are currently transforming

their tactics as a result of similar domestic factors their predecessors experienced during North

65 Ibid, 234.

66 Ibid, 173.

67 See “Docket Wrench - Document: USTR-2012-0014-0024.” Docket Wrench.

http://docketwrench.sunlightfoundation.com/document/USTR-2012-0014-0024, Accessed June 27, 2015. for

PhRMA open letter to USTR on Mexico’s participation in TPP negotiations and failure to abide by NAFTA

regulations. 68 Amitendu Palit, “TPP and Intellectual Property: Growing Concerns” Foreign Trade Review. 48.1 (2013): 153-

159. http://ftr.sagepub.com/content/48/1/153.abstract, Accessed August 24, 2015

2 6

American integration. As President Obama nears the conclusion of his second term, the need to

complete a deal securing his legacy is quickly escalating; as demonstrated earlier, the TPP is

cornerstone of the President’s Asia policy. 69 Further, for the upcoming election cycle it is

important for Democrats to burnish their economic and foreign policy credentials. A 2016

Democratic election victory and a president’s historical legacy are more than enough motivation

to complete the TPP agreement in the near future. U.S. negotiators are adjusting bullish tactics

while conceding issue areas to push the agreement further along. Despite its previous

determination to include pharmaceutical pricing in the agreement, the U.S. dropped the issue of

pharmaceutical pricing from their list of demands in June 2015.70 The American negotiators’

strong-arm approach followed by concessions on disputed provisions reflects the trajectory of the

NAFTA negotiations. In both cases, they represent political decisions based on impending

elections, the looming end to a presidential administration, and the perceived need to conclude

negotiations rapidly.

U.S. negotiators’ willingness (or lack thereof) to concede issue areas elucidates

priorities and the dramatic nature of the Trans-Pacific Partnership agreement. Although final

U.S. concessions are unknown,71 aggressive and unyielding positions for specific issue areas

communicate a heightened level of importance for Washington. At this time, it is reported that

various chapters are complete, including those on telecommunications, small and medium

enterprises, and regulatory coherence. These chapters were purportedly met with relatively little

69 Peter Baker, “The Trans-Pacific Partnership and a President’s Legacy.” The New York Times, June 14, 2015.

http://www.nytimes.com/2015/06/15/world/asia/the-trans-pacific-trade-deal-and-a-presidents-legacy.html, Accessed

June 25, 2015.

70 Johnathan Weisman, “U.S. Shifts Stance on Drug Pricing in Pacific Trade Pact Talks, Document Reveals.” The

New York Times, June 10, 2015. http://www.nytimes.com/2015/06/11/business/international/us-shifts-stance-on-

drug-pricing-in-pacific-trade-pact-talks-document-reveals.html. Accessed June 25, 2015.

71 Mike DeBonis, “Obama Trade Agenda Inches toward Passage with Senate Vote on ‘Fast Track.’” The Washington

Post, June 23, 2015. http://www.washingtonpost.com/politics/obama-trade-agenda-inches-toward-passage-with-

senate-vote/2015/06/23/76ded0fa-19c5-11e5-bd7f-4611a60dd8e5_story.html. Accessed July 7, 2015.

2 7

controversy and a general consensus was established.72 This quick consensus among a disparate

group of agents likely means there are few substantive changes from current international regimes

or norms. These chapters likely further align nations with current standards as opposed to pushing

international norms and regimes beyond existing regulations. While these are important to the

United States, the USTR is likely to have placed considerable negotiating capital behind other,

higher priority issues that advance U.S. interests, and do not merely continue the status quo. Prior

to the most recent negotiating session held in March, a number of contentious issues were still left

to be worked out, including intellectual property and investor-state dispute settlements.73 The

difficulty in negotiations and creating consensus for both issues highlights the importance that the

United States places on significantly altering the norms and expanding the reach of U.S.-based

regimes in these areas even when faced with resistance from its partners.

Levels of priority for issues such as investor-state disputes and intellectual property can

be partially deduced from current impasses. Developed nations have a significant comparative

advantage in these areas of specialization. This comparative advantage for the United States is

manifested in a variety of negotiating points. For example, Japan and the United States are still at

odds over Japan’s willingness to open its agriculture and auto market to foreign imports. On the

surface, this seems to be a traditional trade issue of foreign access weighed against protection of a

domestic market. The Japanese are certainly aware of potential consequences to domestic

agriculture production that would result from increased access of American beef and dairy

producers. However, additional considerations facing negotiators promote a climate of minimal

consensus. Due to the expansive nature of intellectual property and investor-state dispute

72 Ferguson, McMinimy, and Williams (2014)

73 Lenore Taylor, “Australian MPs Allowed to See Top-Secret Trade Deal Text but Can’t Reveal Contents for Four

Years.” The Guardian. http://www.theguardian.com/business/2015/jun/02/australian-mps-allowed-to-see-top-secret-

trade-deal-text-on-condition-of-confidentiality. Accessed July 24, 2015.

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settlements, agriculture is not merely about growing and selling goods. The investor-state regime

has been utilized frequently on agriculture issues relating to pesticide use, such as Chemtura

Corporation v. Canada74 and Dow AgroSciences v. Canada.75 By promoting increased market

integration with robust investor protections, the likelihood of costly litigation increases in areas

such as Japanese agriculture and auto manufacturing. Based on recent history exemplified in the

Chemtura and Dow AgroSciences cases, Canadian and American negotiators are certainly aware

of the legal implications and potential costs of international adjudicatory mechanisms. These

mechanisms demonstrate the United States’ desire to go beyond existing norms and agreements,

while insisting on a convergence of Western-oriented regimes.

Intellectual Property

The expansion of intellectual property rights demonstrates noteworthy differences

between the two free trade agreements while highlighting the TPP’s lofty and ambitious agenda.

The intellectual property provision of NAFTA was groundbreaking for the region. Prior to

signing NAFTA, Mexico was one of the world’s largest pirates of intellectual property. In 1991,

President Salinas signed Mexico’s new IP law, the Law for the Promotion and Protection of

Industrial Property.76 Under this law, new patents were extended to microorganisms,

biotechnological and pharmaceutical chemicals, and plant varieties. Trademarks were extended

74 See Chemtura v. Canada. UNICTRAL (1976). Due to restrictions on the importation of lindane and use of

pesticides by the Environmental Protection Agency, Chemtura filed suit against the Canadian government for a

dispute involving alternative products registered to replace lindane.

75 See Dow AgroSciences LLC v. Government of Canada. U.S. corporation brought suit against Canada for losses

stemming from a ban of all pesticides with the active ingredient 2, 4-D.

76 Law on the Promotion and Protection of Industrial Property, June 25, 1991, 5 Industrial Property Law and Treaties,

WIPO Publication No. 609 (E). http://www.wipo.int/wipolex/en/details.jsp?id=3078, Accessed June 20, 2015.

2 9

to a ten year protection. First time copyrights were given to computer software and recordings.77

The 1991 law was significant because Mexico was brought in line with international IP law,

making the implementation of NAFTA provisions less radical. Canada’s significant IP

protections created commonality with the United States, smoothing negotiation of intellectual

property rights.

One of NAFTA’s key contributions to intellectual property was to raise the standard of

protection to an international treaty obligation; Chapter XVII established the overarching

commitments for North American intellectual property.78 Chapter XVII begins by recognizing

four prior conventions relating to intellectual property: The Geneva Convention for the

Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms

(1971), the Berne Convention for the Protection of Literary and Artistic Works (1971), the Paris

Convention for the Protection of Industrial Property (1967), and the International Convention for

the Protection of New Varieties of Plants (1978).79 Key Chapter XVII intellectual property

provisions include: expanded authority of IP owners to impound infringing goods at customs;80

expanded judicial authority to issue injunctions ordering violators to stop illegal activity;81

“pipeline protection” for pharmaceutical and chemical products;82 and protection for

semiconductor integrated circuits.83 These key features of the agreement’s text helped codify

intellectual property rights within the North American region. At the time these were unique and

77 Frank Garcia, “Protection of Intellectual Property Rights in the North American Free Trade Agreement: A

successful Case of Regional Trade Regulation.” American University Journal of International Law and Policy 8,

(1993): 817-838 http://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=1275&context=lsfp, Accessed June

19, 2015.

78 North American Free Trade Agreement, 32 I.L.M. 289 and 605 (1993) https://www.nafta-sec-

alena.org/Home/Legal-Texts/North-American-Free-Trade-Agreement, Accessed May 22, 2015

79 Ibid.

80 Art. 1718.

81 Art. 1715.

82 Art. 1709.

83 Art. 1710.

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impactful. However, subsequent international treaties, evolving international norms, and

advances in technology position NAFTA’s intellectual property provisions as a beginning and

not an end.

Over the past three decades since the implementation of NAFTA, developed nations like

the United States have been primary drivers in the development of international intellectual

property law. Contemporary agreements providing the framework for intellectual property

include the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

developed under the GATT, the Anti-Counterfeiting Trade Agreement (ACTA), and World

Intellectual Property Organization (WIPO). The TRIPS agreement, ushered in during the

Uruguay Round which concluded in 1994,84 was heralded as the most comprehensive

international intellectual property agreement in history.85 At the time, intellectual property

protection was a primary concern of the U.S., as pirates in developing countries diminished

corporate profits. During this period, U.S. industries lost an estimated $60 billion due to piracy

and lax enforcement.86 It was presumed that the risk and cost of innovation, coupled with losses

from piracy, created a significant trade barrier. The rampant losses from piracy were felt

throughout the biotechnology and pharmaceutical industry, entertainment and artistic sectors,

and high-end fashion. Strong patent, copyright, and trademark protection were stressed.

Although NAFTA negotiators were certainly privy to the text and ambition of TRIPS, TRIPS

84 Rochelle Cooper Dreyfuss and Andreas F. Lowenfeld, “Two Achievements of the Uruguay Round: putting TRIPs

and Dispute Settlement Together” Virginia Journal of International Law., 37, (1996): 275. https://litigation-

essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&crawlid=1&crawlid=1&doctype=cite&docid=37+

Va.+J.+Int%27l+L.+275&srctype=smi&srcid=3B15&key=aa20e1abffd5fd6f819de28a6594bd3d, Accessed May 6,

2015.

85 Susan K. Sell, “TRIPS was Never Enough: Vertical Forum Shifting, FTAs, ACTA, and TPP” Journal of

Intellectual Property Law. (2011). http://infojustice.org/download/tpp/tpp-academic/Sell%20-

%20TRIPS%20Was%20Never%20Enough%20-%20June%202011.pdf, Accessed June 30, 2015, Sell analyzes in

depth vertical forum shifting since the implementation of TRIPS.

86 Michael L. Doane, “TRIPS and International Intellectual Property Protection in an Age of Advancing Technology”

American University International Law Review 9.2 (1994): 465-497.

http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1467&context=auilr, Accessed June 11, 2015.

3 1

legal jurisdiction went beyond the regional agreement to include all GATT members. The

agreement not only set standards for investor protection, but required domestic enforcement, as

well as dispute settlement mechanisms.87

Coming on the heels of TRIPS, the ACTA is the most recent multilateral agreement

enforcing both criminal and civil IP. The agreement was signed on October 1, 2011 by Australia,

Canada, European Union, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea,

Switzerland and the United States. The general areas of concern included civil enforcement,

border measures, criminal enforcement, and enforcement in the digital environment.88 Falling

outside the scope of any international institution, the agreement excluded participation from

developing countries.89 Whereas TRIPS allowed for flexibility in compliance, ACTA is rigid for

developing countries wishing to accede. The ACTA includes text about developing additional

institutional arrangements, such as a Secretariat.90

A final predecessor of TPP’s proposed intellectual property regime is WIPO, which was

established in 1970 and became a specialized agency of the United Nations in 1974. WIPO

serves three primary functions: to administer numerous international agreements, including the

Patent Cooperation Treaty; to promote the expansion of intellectual property legislation

throughout the developing world; and to create a forum for policy development to extend global

governance of intellectual property.91 In addition to this mandate, in 2004 many developing

country members with support from international non-governmental organizations (INGOs)

87 Ibid, 477.

88 Kimberlee, Weatherall, “Intellectual Property in ACTA and the TPP: Lessons Not Learned”

http://works.bepress.com/cgi/viewcontent.cgi?article=1026&context=kimweatherall, Accessed May 25, 2015.

89 Sell, 458-468.

90 Sell, 458-468.

91 See Christopher May, “World Intellectual Property Organization (WIPO): Resurgence and the Development

Agenda” Global Institutions Series. (Routledge, 2007) for complete history of WIPO and its current operation,

global governance and the intellectual property regime, and WIPO’s resurrection to relevance.

http://s1.downloadmienphi.net/file/downloadfile4/206/1391117.pdf, Accessed June 30, 2015.

3 2

fought to augment WIPO’s responsibilities with a development-oriented focus.92 Despite

questions about WIPO’s relevancy due to bureaucratic constraints, the organization has regulated,

promoted, and administered intellectual property rights for over four decades. The development of

TRIPS, ACTA, and WIPO are key precursors to the role and expansive nature of intellectual

property in the Trans-Pacific Partnership.

Notwithstanding the secret and closed-door policy of the TPP negotiations, two draft

texts of intellectual property chapters have been leaked.93 The release of these early proposals

demonstrate the extent to which U.S. negotiators seek to advance intellectual property rights. The

framework for the intellectual property chapter is built on the “controversial standards of the

Korea-U.S. Free Trade Agreement (KORUS) and the Anti-Counterfeiting Trade Agreement

(ACTA).”94 In many instances, the drafts reveal expansive ambitions beyond any prior U.S.

agreement including NAFTA, TRIPS, or the ACTA. For example, a proposed issue from 2011

grants intellectual property holders the ability to prohibit all forms of reproduction, including

temporary storage in electronic form. While this was included in KORUS, it is not actually

present in domestic U.S. copyright law.95 Domestic copyright law has a “fixed”96 quality which

does not apply to temporary electronic copies. Further expansion of intellectual property law can

be found in the 2011 U.S. proposal for intellectual property. The chapter provides exclusive

rights to intellectual property owners to determine prices and policies for entry into new

92 Ibid, 4.

93 For two IP chapter drafts see Trans-Pacific Partnership, Intellectual Property Rights Chapter February Draft 2011,

available at http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf.; Trans-Pacific Partnership,

Intellectual Property Rights Chapter September 2011, available at http://www.citizenstrade.org/ctc/wp-

content/uploads/2011/10/TransPacificIP1.pdf, Accessed August 15, 2015.

94 Sean Flynn, Margot E. Kaminski, Brook Baker, and Jimmy H. Koo, “Public Interest Analysis of the US TPP

Proposal for an IP Chapter” PIJIP Research Paper Series. Paper 21. (2011)

http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1023&context=research, Accessed June 30,

2015.

95 Ibid, 13.

96 Copyright Law of the United States of America. 17 U.S. Code § 102, “Copyright protection subsists, in

accordance with this title, in original works of authorship fixed in any tangible medium of expression.”

3 3

markets.97 This provision enables copyright owners to prevent the parallel importation into

a partnering country, shifting this right from domestic law to copyright holder.98 This shift

of rights to the copyright owner has little precedent in existing treaty requirements.

Furthermore, the proposed agreement would expand the concept of patentability. Patents

remain one of the more controversial issues under intellectual property. The U.S. proposal seeks

to align the TPP’s membership with U.S. intellectual property standards. The proposed chapter

would broaden patentability’s definition, increase patent terms, impose data exclusivity, and

restrain TRIPS flexibility.99 Under NAFTA and TRIPS, requirements for a patent centered on

being new or innovative.100 The proposed agreement permits patents even if the new method does

not enhance the product. Each new product would result in a 20-year patent. This exposes

developing countries to a host of chemical, drug, formula, and dosage modifications, which do

not necessarily add value, yet are greeted with protection.101 In addition, overly broad concepts of

patentability threaten developing countries ability to produce generic drugs or make

innovative developments. The United States’ intentions to increase patentability’s breadth and

depth demonstrate the potential of the TPP on the international intellectual property regime.

The TPP’s intellectual property provisions seek to expand the issue of enforcement

beyond existing levels of international law and norms. Enforcement of intellectual property is a

priority for particular industries and nations. Open letters from 2010 reveal the degree to which

97 4.2. Each Party shall provide to authors, performers, and producers of phonograms the right to authorize or

prohibit the importation into that Party’s territory of copies of the work, performance, or phonogram made without

authorization, or made outside that Party’s territory with the authorization of the author, performer, or producer of

the phonogram.

98 Sean Flynn, Brook Baker, Margot Kaminski, and Jimmy Koo, “The U.S. Proposal for an Intellectual Property

Chapter in the Trans-Pacific Partnership Agreement” American University International Law Review 28.1 (2012)

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2185402, Accessed June 30, 2015

99 Flynn, Baker, Kaminski, and Koo (2012), p. 153.

100 See NAFTA, art. 1709(1), “shall make patents available ... provided that such inventions are new, result from an

inventive step and are capable of industrial application.”; TRIPS, art. 21.1, “patents shall be available for any

inventions...provided that they are new, involve an inventive step and are capable of industrial application.” The

similarity in language of these articles demonstrates the link between the developments of the two treaties.

101 Flynn, Kaminski, Baker, Brook, and Koo (2012), 8-37.

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enforcement has been a priority for intellectual property rights’ proponents from the beginning

of the negotiations. The International Intellectual Property Alliance, a coalition of seven

associations representing U.S. copyright industries, wrote on numerous occasions to the USTR

expressing desire for strong criminal remedies for infringement, ex officio authority for criminal

actions and border measures, and provisions for various piracy issues.102 Past intellectual

property regimes have not staked out significant claims for IPR enforcement. In 2011, U.S.

negotiators aimed to shift standards by reducing thresholds for enforcement. Two points of

shifting thresholds include obligations for enforcement and injunctions. Proposed expansion

seems to imply an elevated level of compliance that includes shifting domestic resources to

enforce protocols. Additionally, proposed expansion of injunction relief requires states to not

only stop the importation of materials that infringe IPR protections, but to also halt any believed

exports.103

The expansion of enforcement provisions, which seeks to shift the burden from private

holders onto the public, is a critical issue for developing nations. This burden for many

developing nations is perilous because of limited financial and institutional resources. If nations

cannot meet this threshold they would be in danger of violating international treaty obligations.

Due to the intensive pressure that U.S. negotiators are applying in the intellectual property rights

arena, enforcement provisions will likely expand beyond existing levels. Additionally,

enforcement rests on principles that are unbalanced; protected goods such as pharmaceuticals

benefit from exclusionary pricing which adversely effects many consumers.104 Protection and

102 “Docket Wrench - Document: USTR-2010-0031-0005.” Docket Wrench. Accessed June 28, 2015.

http://docketwrench.sunlightfoundation.com/document/USTR-2010-0031-0005. 103 See Flynn, Kaminski, Baker, Brook, and Koo (2012) for detailed comparison of the proposed TPP-rights

pertaining to IPR enforcement and existing rights under TRIPS. 104

Ibid, 186.

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exclusive pricing are themselves major causes for pirating and copyright infringement.105 As the

living agreement allows for nations to accede in the future, the United States seeks to rewrite

intellectual property regulations not in an open setting like TRIPS and the WTO, but the rather

veiled context of free trade negotiations. Despite not having any official text through WTO

forums, leaked documents suggest that the TPP will expand the breadth and depth of

international intellectual property rights regime.

Investor-State Dispute Settlements

Investor-state dispute settlements comprise another key component of the Trans-Pacific

Partnership’s ambitious agenda. This dispute mechanism was originally conceived as a protective

instrument for investors interested in risky foreign investment. Trade policy theory held that the

establishment of a forum to seek remedies would establish the necessary conditions for the

proliferation of foreign direct investment.106 Developed countries would receive greater

assurance of investment safety, while developing countries would benefit from increased streams

of capital.

The United States has negotiated numerous bilateral investment treaties (BITs) with the

inclusion of dispute mechanisms, but NAFTA’s investor-state dispute settlement was unique. For

the first time in North America, an institution was established to arbitrate claims between two

developed nations. Before NAFTA the primary function of ISDS was to mediate disputes

between developed and developing countries. Although investors were largely concerned with

105 Joe Karaganis, ed., “Media Piracy in Emerging Economies” Social Science Research Council 61. (2011).

http://piracy.americanassembly.org/wp-content/uploads/2011/06/MPEE-PDF-1.0.4.pdf, Accessed June 30, 2015 106 See Eric Neumayer and Laura Spess, “Do bilateral investment treaties increase foreign direct investment to

developing countries?” London: LSE Research Online. http://eprints.lse.ac.uk/627/ Accessed August 10, 2015; Peter

Egger and Michael Pfaffermayr, “The impact of bilateral investment treaties on foreign direct investment” Journal of

Comparative Economics. 32.4 (2004): 788-804. http://eprints.lse.ac.uk/627/, Accessed August 10, 2015.

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Mexico’s compliance with international investment, many of the early claims filed under

NAFTA were between the United States and Canada.107 Since the early 1990s, hundreds of

investor-state dispute clauses have been included in bilateral and multilateral trade accords.108

The TPP is positioned to greatly increase the role of ISDS in trade policy across the

region and beyond. The existing normative framework, developed from numerous BITS and

multilateral agreements, will be strengthening by a desire to further entrench the investor-state

regime. The frequency of ISDS claims, changing normative use of ISDS, expansion in

unconventional issue areas, and the erosion of sovereignty underscore the unrestrained potential

for investor-state dispute settlements under the Trans-Pacific Partnership.

Early interpretations of investor-state dispute mechanisms often understood the policy to

be a protective measure. Despite having roots in prior BITs, the North American agreement was

revolutionary for linking two developed countries and one developing country with an

international dispute mechanism and granting investors direct access to recourse. Prior to the

agreement parties seeking recourse could not bring claims directly. Rather, firms were required to

petition states to negotiate on their behalf. Chapter XI enabled corporations to file suit with

national governments for any regulatory activity which diminished profits; additionally,

corporations can make claims to protest anticipated future profits.109 Although NAFTA’s critics

warned against limitations on national sovereignty and the right to legislate on behalf of public

goods, many found Chapter XI to be instrumental to direct foreign investment.110 Without

substantive protections, investors from the United States and Canada found it difficult to risk

107 Ray C. Jones, “NAFTA Chapter 11 Investor-to-State Dispute Resolution: A Shield to Be Embraced or a Sword to

be Feared” 2002 BYU L. Rev 527 (2002)

http://digitalcommons.law.byu.edu/cgi/viewcontent.cgi?article=2122&context=lawreview, Accessed July 18, 2015. 108 Tienhaara, 3. 109 NAFTA, art. 1115. “this Section establishes a mechanism for the settlement of investment disputes that assures

both equal treatment among investors of the Parties in accordance with the principle of international reciprocity and

due process before an impartial tribunal.” 110 Jones, (2002).

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capital across the border. By bolstering international norms for investment, investors had a

legitimate method to seek redress outside their domestic government.111 Although Chapter XI

was not entirely innovative, having its roots in past BITs, the scope of the agreement, coupled

with an explosion of investor-state dispute settlements in additional trade agreements, positions

NAFTA as a strong starting point for TPP-ISDS analysis.

NAFTA’s codification of investor-state dispute settlements helped consolidate the

investor-state regime in subsequent trade agreements. Since the early 1980s there have been over

3,268 international investment agreements.112 The advancement of the investor-state regime has

helped institutionalize the adjudicatory practice. Under Chapter XI, an explosion of disparate

claims were brought against the North American partners. Most of the claims filed under

NAFTA are related to environmental policy, public health, land use, and transportation

policies.113 By 2010, American investors had submitted 27 claims to Canada under NAFTA.114

There were 42 new ISDS cases initiated in 2014.115 Despite critics myriad concerns, including

the infringement of state sovereignty, constitutional overstep, and environmental exploitations,

investor protections embedded in development economics’ prescriptions have prevailed as the

dominant policy course.116 The frequency in which ISDS have occurred under NAFTA and other

trade agreements provides some context for the current negotiations. Due to their increasing

111 Ibid.

112 United Nations Conference on Trade and Development. Recent Trends in IIAs and ISDS. 1 (2015) Accessed May

5, 2015 http://unctad.org/en/PublicationsLibrary/webdiaepcb2015d1_en.pdf. International investment agreements

consist of BITs and investment chapters in trade agreements. 113

Public Citizen, (2015). 114

Kyla, Tienhaara, “Investor-State Dispute Settlement in the Trans-Pacific Partnership Agreement” Submission to

the Department of Foreign Affairs and Trade. Australian National University. (2010)

http://www.pc.gov.au/inquiries/completed/trade-agreements/submissions/subdr067-attachment1.pdf, Accessed May

26, 2015

115 Ibid.

116Todd Allee and Clint Peinhardt, “Contingent Credibility: The Impact of Investment Treaty Violations on Foreign

Direct Investment” International Organization 65.3 (2011): 401-432.

http://www.jstor.org/stable/23016160?seq=1#page_scan_tab_contents, Accessed July 26, 2015, argue that trending

patterns of more BITs will increase levels of FDI if governments honor legal obligations and are not brought before

an arbitration venue.

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regulatory role, normative acceptance, and public policy reliance, the investor-state regime

becomes further ingrained as the TPP continues this precedential path to investor rights.

The expansive nature of the investor-state regime under the TPP is due in part to recent

usage of ISDS claims by corporations. The adjudicatory mechanism is becoming increasingly

entrenched in international trade policy, with cases covering disparate areas such as the operation

of domestic courts, denial of regulatory permits, environmental and public health issues,

extractive industries, and emergency management during financial tumult.117 Although protection

of foreign direct investment is a legitimate concern, corporations are utilizing the investor-state

regime despite lawful national regulation.

Increasing utilization of the investor-state regime and dubious incursion into matters of

public welfare have fundamentally altered the landscape in which the TPP will operate. In 2011, in

the wake of the Fukushima nuclear meltdown in Japan, German Chancellor Angela Merkel

announced plans to shut down the nation’s nuclear program by 2022.118 Notwithstanding national

safety and energy concerns, Swedish utility Vattenfall sued Germany for €3.7 billion in

damages.119 Moreover, the Renco Group sued Peru after the government shut down a metal

smelter in La Oroya amidst local health concerns. After failing to meet two deadlines to install

sulfur plants to help alleviate local environmental and health problems, Renco brought an $800

million suit under the U.S.-Peru FTA. This notoriously polarized case positioned one of the

world’s wealthiest owners, Ira Rennert, against the people of La Oroya.120 Changing normative

117 Public Citizen, “U.S.-Peru FTA Investor Rights: Lessons Learned and New Approaches Needed for Trans-Pacific

Partnership” http://www.citizen.org/documents/peru-tpp-investment-memo.pdf, Accessed June 10, 2015. 118

Judy Dempsey and Jack Ewing, “Germany to Close All Nuclear Plants by 2022.” The New York Times, May 30,

2011. http://www.nytimes.com/2011/05/31/world/europe/31germany.html?_r=0, Accessed May 10, 2015. 119

“The Arbitration Game.” The Economist, October 11, 2014. http://www.economist.com/news/finance-and-

economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration, Accessed May 3, 2015. 120

Public Citizen, “U.S.-Peru FTA Investor Rights: Lessons Learned and New Approaches Needed for Trans-Pacific

Partnership” http://www.citizen.org/documents/peru-tpp-investment-memo.pdf, Accessed June 10, 2015.

3 9

practices and the investor-state regime’s incursion into matters of public welfare have created a

fundamentally altered landscape in which the TPP will be implemented.

The Trans-Pacific Partnership’s drafters are seeking to further increase levels of investor

protection by binding nations to the investor-state regime. Currently, the United States has

existing ISDS agreements in force with six TPP countries. The remaining partners – Australia,

Brunei, Japan, Malaysia, and New Zealand – are party to 100 agreements containing dispute

mechanisms. 121 Of these partners which have no investor-state pact with the United States, at

least 9,274 corporations would gain the ability to file claims against Washington. Conversely, the

United States has 18,585 corporations in these five countries.122 By attempting to bind the five

remaining partners, the U.S. government will bolster the pharmaceutical and technology

industries through increased market access, product and patent control, and revenue in markets

such as Malaysia, Brunei, and New Zealand.

The U.S is markedly confident in this trade strategy in part because it has defended

numerous claims without suffering defeat. The inclusion of ISDS will buttress U.S. power in

emerging areas of TPP such as intellectual property and internet freedom. However, the TPP

partners do not lack agency and some are vocal critics of the mechanism. This issue area has

been particularly contentious during the negotiations. The Australia-US FTA (AUSFTA) does

not contain an ISDS due to Australia’s persistent objections during negotiations. In 2011, the

Australian Government vehemently stated that it would no longer support dispute settlements

that put investor rights before public welfare. With changes in its national leadership, the

Australian position has vacillated during various trade negotiations, yet dispute mechanisms

121 Office of the United States Trade Representative, “Investor-State Dispute Settlement (ISDS).”

https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2015/march/investor-state-dispute-settlement-isds,

Accessed July 16, 2015. 122

Public Citizen, “TPP Investment Map: New Privileges for 28,000 Companies.”

http://www.citizen.org/Page.aspx?pid=4083, Accessed July 30, 2015

4 0

remain a significant point of contention. Similarly, despite having an ISDS with the United States,

Vietnam opposes expansive application of the investor protection regime. By including an

additional five nations to bind ISDS with the United States, investor protections will greatly

expand throughout the region.

The history of Chapter XI has shown that an expansion of the investor-state regime does

not always bode favorably for developed countries. Despite initial investor concerns about

Mexico’s disreputable image as an intellectual property pirate, Canada was the most frequent

defendant in Chapter XI suits. By 2015, of the 77 NAFTA investor-state disputes, Canada has

faced 35 cases and paid over $172 million. Since 2005, they have faced over 70% of all NAFTA

claims.123 Issue areas have included environmental protection, energy, pharmaceuticals, and

waste management. The post-1994 trend of developed partners filing suit against one another is

surely to continue with the TPP agreement. The potential for elevated levels of investor disputes

between Japan and the U.S. is quite stark. By binding to an international treaty with profit

generating rights, each country will risk litigation in areas of specialization including intellectual

property, pharmaceutical and technological production, natural resource exploitation and

protection, and financial regulation. These overlapping areas of interest will likely expand the use

of ISDS between developed nations. Although exact wording of the text and provisions of ISDS

is currently unknown, a multilateral treaty including developed TPP partners which do not

currently have ISDS with the U.S. will expand the investor-state regime.

By increasing substantive areas for which ISDS can be initiated, the mechanism will

become more firmly entrenched in international trade policy. The dispute settlement regime will

123 Scott Sinclair, “NAFTA Chapter 11 Investor-State Disputes to January 1, 2015.” Canadian Centre for Policy

Alternatives (2015)

https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2015/01/NAFTA_Cha

pter11_Investor_State_Disputes_2015.pdf, Accessed July 17, 2015.

4 1

expand beyond its current usages and engulf developed and developing partners in a plethora of

suits. For example, as the USTR notes, the TPP’s environmental working group124 is considering

new proposals involving marine fisheries, biodiversity, invasive alien species, and climate

change.125 However, by including a host of new environmental issues alongside the dispute

settlement regime, investors’ ability to seek recourse will be advanced. Legislation protecting

against environmental degradation will be in jeopardy due to the potential for these claims. As

demonstrated by the Renco Group vs. Peru, the regulation of industry after the implementation of

trade agreements and increased investor protections can be extremely difficult.

The regional accord’s handling of e-commerce presents unique opportunity for the

investor-state dispute mechanism to expand its reach. Although none of the e-commerce chapters

were leaked, based on country reports,126 privacy obligations in regard to information sharing is a

central concern. Additionally, the United States aims for unfettered cross-border data flows and

strongly opposes domestic requirements for data to be located in-country in order to promote

internet-based services and cloud-computing.127 With the actualization of a free flow of data

across borders, countries like Australia, Vietnam, and Malaysia could be exposed to ISDS suits

due to domestic legal requirements. E-commerce and new technologies built on the movement of

data would have issue with information stored locally on servers and large claims are plausible.

Additionally, the new cross-cutting issue of state-owned enterprises presents significant

ramifications for the expansion of dispute settlements. Traditionally, state-owned enterprises are

influenced by the government with the potential for subsidies, low cost credit, preferential access

124 There are 21 working groups negotiating the 29 chapters of TPP. US-ASEAN Business Council.

https://www.usasean.org/regions/tpp/about, Accessed July 30, 2015

125 Office of the United States Trade Representative, “Outlines of TPP” https://ustr.gov/tpp/outlines-of-TPP,

Accessed July 30, 2015. 126

Zach Carter, “Obama Faces Backlash Over New Corporate Powers in Secret Trade Deal.” Huffington Post

http://www.huffingtonpost.com/2013/12/08/tpp-trade-agreement_n_4409211.html, Accessed July 30, 2015. 127

Ferguson, McMinimy, and Williams (2014) p. 41.

4 2

to government procurement, and trade protection. Vietnam, Malaysia, and Singapore have

significant state-owned enterprises. Past trade agreements’ handling of state-owned enterprises

are inconsistent and offer varying possibilities for the state-owned enterprise chapter. Although

these enterprises are met with a general acceptance, specific provisions and exemptions are

uncertain. The consolidation and expansion of state-owned enterprises as an issue area under the

TPP presents investors with a potential grievance to be sorted out through arbitration.128

The final issue area which presents a unique opportunity for further integration of

investor-state dispute settlements is the inclusion of a small- and medium-sized enterprises

(SMEs) chapter. SMEs typically have particular difficulties accessing foreign markets, and the

chapter aims to improve greater access and liberalization. The chapter was completed in 2012,

but little has been released. SMEs account for 97% of international trade. The significant

presence of SMEs in international trade seemingly made the negotiations conclude with relative

rapidity. By promoting SMEs in international trade, and granting them improved access to FTA

mechanisms, businesses will have expanded access to all of the TPP’s levers, in particular

investor-state dispute settlements. Specifically, emerging tech-oriented businesses will find

adjudicatory relief from protectionist measures in foreign markets. By promoting greater access

to the TPP’s mechanisms, SMEs are likely to bring a host of new suits against foreign capitals.

Promotion of the trade accord, increased awareness of the agreement’s utility, and governmental

consensus position SMEs to play an important role in embedding investor-state disputes across

the region.

The investor-state regime uniting twelve countries across the Pacific Rim threatens to

continue the erosion of state sovereignty. The infringement on state sovereignty is not entirely

novel nor problematic by definition; however, implicit and explicit consequences due to ISDS

128 Ibid, 44.

4 3

claims can stymie legislation for the public welfare. Prior trade agreements set specific

parameters for which claims can be brought before an arbitrator. Anything falling outside the

text of the free trade accord remains a matter for national courts. However, the TPP’s intrepid

framework positions ISDS to become increasingly coercive and forceful. As the TPP’s text is

designed to be a living agreement, in the future both nations and substantive issues will be

weighed for admittance to the regional trade deal. The potential for the inclusion of

supplementary chapters positions the TPP to further erode sovereignty through the

advancement of the investor-state regime. As developed states fight more arbitrations, enacting

legislation to preserve the public good will become increasingly more difficult. States will need

to weigh the cost of national legislation protecting public health systems, environmental

sustainability, and economic reforms against international investment rights and the threat of

litigation. This implicit encroachment of a nation’s sovereignty is directly affected by the

regime’s coercive nature.

The investor-state regime’s structure and processes supplement the continued erosion of

state sovereignty. Questionable infringements on domestic judicial rights are raised by the use of

arbitrators in commercial disputes. The TPP’s three-person panel will be chosen by giving one

selection to the investor, one to the country being challenged, and one to the first two

arbitrators.129 International lawyers who serve on the three-person panels often fluidly move

between professional, corporate, or federal posts, and service on an international commercial

tribunal. Their revolving door raises questions pertaining to partiality. Furthermore, unlike U.S.

federal and state law, rulings need not rest in precedent. Each case is adjudicated on its own

character with no influence from an overarching body of law.

129 Alan Morrison, “Is the Trans-Pacific Partnership Unconstitutional?” The Atlantic, June 23, 2015.

http://www.theatlantic.com/politics/archive/2015/06/tpp-isds-constitution/396389/, Accessed July 15, 2015

4 4

Absent a final text of the Trans-Pacific Partnership’s investment chapter, important

insights can be extrapolated due to evolving normative positions. The increased frequency in

which ISDS suits have risen since the implementation of NAFTA position the TPP to be a

catalyst for further expansion. Additionally, the dubious use of ISDS by corporations seeking

incursion into public welfare matters have greatly expanded the investor-state regime. By

continuing this interpretative approach, the regime will become more fully entrenched in

international trade policy. Moreover, the TPP’s substantive expansion into cross-cutting issues

such as e-commerce and small and medium-sized businesses further exposes countries to risky

investment suits. The TPP’s ambitious agenda, coupled with developing normative behavior,

ultimately threatens to continue the transformation of the investor-state regime beyond a policy

to merely protect foreign capital. In the next chapter, three geopolitical conditions – Chinese

ascendancy, competing trade agreements, and climate change – are analyzed in relation to the

TPP’s implementation and sustainability.

4 5

Chapter IV: Geopolitics

The ratification and implementation of the Trans-Pacific Partnership will bring the

agreement into direct confrontation with geopolitical realities across the region. Such realities

will either advance or prohibit the agreement’s effectiveness. Although all future conditions are

inevitability unknowable as demonstrated by the NAFTA framers’ failure to consider China’s

rise as a manufacturing power, the TPP will enter a world with specific conditions already

established. Three specific geopolitical conditions which are certain to collide with the TPP

include: Chinese ascendancy, competing trade agreements, and climate change. The subsequent

chapter analyzes each of these three conditions while exposing potential sources of conflict with

the Asia-Pacific accord. First, Chinese ascendancy must be analyzed through three lenses:

hegemonic power, economic primacy, and military capabilities. Each of these Chinese goals

presents unique obstacles, and the TPP partners must fully account for each while increasing

regional integration. Second, the TPP must remain attractive to potential partners in light of

competing agreements. The ongoing RCEP negotiations led by Beijing present an attractive

alternative option for nations seeking traditional trade agreements. Third, environmental health

and climate change present significant challenges to increased economic integration. Without

meaningfully addressing these potentially catastrophic conditions, the TPP risks becoming

obsolete. Ultimately, the Trans-Pacific Partnership’s future relevancy will be connected to the

participating nations’ ability to meaningfully engage with these three conditions.

Chinese Ascendency

Since the rise of the United States as a hegemonic power in the early 20th century, many

international regimes and institutions have largely reflected Western interests. Since the fall of

4 6

the Soviet Union, no nation has meaningfully challenged American supremacy until China’s

recent rise to the global stage. The Trans-Pacific Partnership will collide with a new bipolar

world with Washington and Beijing sharing the helm. Future Sino-American relations will need

to address the largest regional trade deal in history. This future confrontation is ripe for analysis

in three areas: hegemonic power, economic primacy, and military capabilities. These three

Chinese goals will significantly impact the TPP’s implementation, as well as lasting stability.

First, the TPP agreement should be understood in part as a conflictual binary between

United States hegemony and Chinese ascendancy. With China’s historic economic success of

annual double-digit GDP growth, the United States position as global hegemon is unstable.

Scholars have argued that this dualism will inevitably lead to military conflict.130 It is unclear

whether those in Washington will concern themselves with relative or absolute gains,131 but it is

likely they will attempt to thwart China’s plan for a bi- or unipolar world with Beijing at the top.

The U.S. wants to maintain a strong foothold in China’s backyard by locking in trading partners

and allies. On April 6, 2015, Secretary of Defense Ashton Carter, speaking at Arizona State

University stated, “in terms of our rebalance in the broadest sense, passing TPP is as important to

me as another aircraft carrier would. It deepens our alliances and partnerships abroad... and it

would help us promote a global order that reflects both our interests and values.”132 The

130 John J. Mearsheimer, The Tragedy of Great Power Politics (New York: Norton, 2001). Print.

131 See Robert Powell, “Absolute and Relative Gains in International Relations Theory” The American Political

Science Review. 85.4 (1991) 1303-1320. http://www.jstor.org/stable/1963947?seq=1#page_scan_tab_contents,

Accessed August 10, 2015; Duncan Snidal, “Relative Gains and the Pattern of International Cooperation” American

Political Science Review. 85.3 (1991) 701-726. http://www.jstor.org.ezproxy.gc.cuny.edu/stable/1963847, Accessed

August 10, 2015; Joseph Grieco, “Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal

Institutionalism” International Organization 42.3 (1988) 485-507.

http://www.jstor.org.ezproxy.gc.cuny.edu/stable/2706787, Accessed August 10, 2015

132 Ashton Carter, Remarks on the Next Phase of the U.S. Rebalance to the Asia-Pacific. McCain Institute, Arizona

State University. 6 Apr. 2015. http://www.defense.gov/Speeches/Speech.aspx?SpeechID=1929, Accessed July 22,

2015

47

Secretary of Defense’s willingness to comment on a free trade deal implicitly highlights China

and the looming collision of hegemonic powers.

One of the Trans-Pacific Partnership’s goals is to bolster American supremacy by

solidifying allies in Asia, specifically on issues imperative to American hegemony like intellectual

property. In order to understand the TPP as a mechanism to maintain U.S. hegemonic power, a

detailed review of Chinese advances and pressures is necessary. This threat to

American supremacy manifests itself through various means. With China’s ascendancy to

regional and world power, Beijing has not only achieved remarkable economic growth, but also

become a creator of international financial institutions, delivering enormous sums of

developmental aid across the world. China is actively competing for allies throughout economic

and financial leadership that directly threatens the status of the U.S. and European post-World

War II roles. The Asian Infrastructure Investment Bank, which is led by Beijing, has established

an initial fund of $50 billion for regional development.133 In spite of strong opposition from the

United States, the Asian Infrastructure Investment Bank has received applications from U.S.

allies including Germany, France, and the United Kingdom, as well as the TPP partners

Australia, Brunei, Malaysia, New Zealand, Singapore, and Vietnam.134 The China Development

Bank and Export Import Bank of China lend more money to allied partners in the region than the

Asian Development Bank and the World Bank combined. Further, Chinese loans have increased

widely through Latin America and Africa. Many countries overly reliant on U.S. economic

integration were devastated during the 2008 financial crises. The Pacific Alliance consisting of

133 Adrian Hearn and Margaret Myers, “China and the TPP: Asia-Pacific Integration or Disintegration?” The

Dialogue. China and Latin America Report. (2015) http://www.thedialogue.org/wp-content/uploads/2015/07/CLA-

TPP-Report-final-web.pdf, Accessed on July 1, 2015. 134

Andrea Thomas Berlin and Charles Hutzler, “Germany, France, Italy to Join China-Backed Development Bank.”

Wall Street Journal, March 17, 2015, http://www.wsj.com/articles/germany-france-italy-to-join-china-backed-

development-bank-1426597078, Accessed July 27, 2015.

4 8

Mexico, Peru, Colombia, and Chile have expressed a need to diversify trading partners and are

beginning to look toward further Chinese integration.135 China’s role as a financial lender and

institutional leader has precipitously increased. International norms and institutional rules which

supported economic liberalization and Carter’s “global order” are in jeopardy.

Secondly, the threat to the global order of U.S. dominance comes in the form of Chinese

military ambition. Although Washington has substantially more strategic capabilities, recent

Beijing budgetary and policy decisions imply discontent with a second-rate military. According to

the U.S. Department of Defense’s 2015 Annual Report to Congress on military and security

developments in China from 2005 – 2014, China’s military budget grew by 9.5 percent.136 Much of

their military strategy focuses on regional concerns such as potential conflicts in the Taiwan Strait,

East China Sea, and South China Sea. Additionally, according to the report, the People’s

Liberation Army (PLA) is seemingly willing to tolerate escalating levels of tension and conflict.

Much of their tactical advances focus on short-term, high impact conflict utilizing weaponry like

cruise and ballistic missiles. In 2015, Beijing announced a 12.2 percent rise in military spending

totaling almost $132 billion.137 Moreover, the recent revelations over the artificial island at

Mischief Reef in the South China Sea and the long running feud over the Spratly Islands138 are

135 Hearn, A., Myers, M. (2015)

136 Office of the Secretary of Defense, Annual Report to Congress: Military and Security Developments Involving

the People’s Republic of China 2015. http://www.defense.gov/pubs/2015_China_Military_Power_Report.pdf,

Accessed on July 15, 2015

137 Edward Wong, “China Announces 12.2% Increase in Military Budget” The New York Times (2014)

http://www.nytimes.com/2014/03/06/world/asia/china-military-budget.html, Accessed July 8, 2015

138 The territory of the Spratly Islands are claimed in part or whole by Brunei, China/Taiwan, Malaysia, the

Philippines and Vietnam. They hold significant potential wealth and military value. Roughly 25% of the world’s oil

passes through the territory (over 80% of Japan’s and 70% of Taiwan’s). Chinese officials estimate oil reserves of

over $1 trillion, as well as fishing areas estimated at $3 billion. Omar Saleem, “The Spratly Islands Dispute: China

Defines the New Millennium” American University International Law Review. 15.3 (2000): 527-582

http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1269&context=auilr, Accessed July 8, 2015

See for a comprehensive take on China’s dealings with the Spratly Islands.

49

potential sources of conflict.139 If the Chinese are able to legitimize their naval presence through

these islands, there are potential ramifications for naval conflict, commercial fishing,

international shipping lanes, and exploratory drilling.140 Escalating Chinese militarism will

likely have a symbiotic relationship with the TPP. For example, if Chinese control of shipping

routes impact Japanese access to oil, subsequent trade will be adversely affected. In addition, if

tensions on the Korean peninsula were to spill into conflict, a proxy war between China and the

United States is plausible. Increased military confrontation will affect production and trade,

shipping lanes, and diplomatic relations through a host of potential outcomes for the Asia-

Pacific trade agreement.

Lastly, the Chinese economy will greatly impact the TPP’s implementation and

effectiveness. Despite unprecedented economic growth, Beijing’s economic engine has cooled

since the financial crisis of 2008. Rates of real GDP growth have fallen from 10.4% in 2010 to

7.4% in 2014. Over the next six years, the IMF predicts China’s GDP growth with be roughly

5.9%.141 There are serious concerns that Beijing’s economic and financial practices will put

China at odds with the TPP. If the Chinese were to view the partnership favorably and want

some form of accession into the agreement, numerous issues would need to be addressed. Many

of the concerns include China’s undervalued currency, subsidies for domestic producers,

protectionist measures for specific industries and firms, widespread intellectual property theft,

139 David Sanger and Rick Gladstone, “Piling Sand in a Disputed Sea, China Literally Gains Ground” The New York

Times. (2015) http://www.nytimes.com/2015/04/09/world/asia/new-images-show-china-literally-gaining-ground-in-

south-china-sea.html, Accessed July 18, 2015

140 The 1980 United Nations Law of the Sea claims, “Every State has the right to establish the breadth of its

territorial sea up to a limit not exceeding 12 nautical miles, measured from baselines determined in accordance with

this Convention.” http://www.un.org/depts/los/convention_agreements/texts/unclos/unclos_e.pdf, Accessed April 6,

2015 141

Wayne Morrison, “China’s Economic Rise: History, Trends, Challenges, and Implications for the United States.”

Congressional Research Service. (2015) https://www.fas.org/sgp/crs/row/RL33534.pdf, Accessed July 27, 2015

5 0

and significant barriers to market entry.142 The Chinese are also hedging against integration in

the TPP. Irrespective of the partnership, already in place are FTAs with a number of the TPP

partners such as Chile, New Zealand, Singapore, and Peru; a trilateral agreement with Japan and

Korea is also currently in negotiation. Ultimately, Beijing’s economic decisions and alliances

will impact the TPP’s implementation.

Competing Agreements

The second geopolitical condition which the TPP will encounter is alternative multilateral

trade options. The TPP will need to be attractive enough to compete with nations’ alternative

trade possibilities. For example, the proposed Regional Cooperative Economic Partnership

(RCEP) directly counters the TPP’s ambitious aims. The RCEP, led by the Chinese, rose out of

two prior 2006 FTA proposals.143 Beijing’s leadership during the RCEP negotiations is another

example of counterhegemonic ascendancy. Membership for RCEP includes the Association of

Southeast Asian Nations (ASEAN)144 plus Australia, China, India, Japan, South Korea, and New

Zealand. RCEP addresses fewer issue areas than the TPP and wants to simplify the overlapping

FTAs of the ASEAN.145 For everything the TPP seeks to address, the RCEP offers a much more

traditional agreement focused primarily on reducing tariffs, eliminating discriminatory behavior,

and improving the climate for greater investment. Moreover, the agreement takes note of less-

developed economies. While the TPP is indifferent toward equitable economic growth, RCEP

aims to “address the special needs of less-developed ASEAN economies through early

142 Ibid.

143 The two previous FTAs were: 1) East Asia Free Trade Area (ASEAN +3) 2) Comprehensive Economic

Partnership in East Asia (ASEAN +6)

144 ASEAN membership includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,

Singapore, Thailand, and Vietnam. 145

Ganeshan Wignaraja, “Regional Comprehensive Economic Partnership Agreement (RCEP) An initial

assessment.” Asian Development Bank Institute (2014) http://ewcbookstore.org/NewDirections/NewDirections-

04rcepnegotiation.pdf, Accessed July 30, 2015.

5 1

elimination of tariffs on products of interest to them.”146 This focus is of particular importance

due to great disparities in development among ASEAN members.

The RCEP and the TPP are being negotiating simultaneously with similar completion

dates. If the RCEP is completed first, the TPP will be adversely impacted. The relatively

demanding nature of the TPP may drive nations closer to the RCEP and increased integration

with China. A nation like Indonesia with significant human rights abuses,147 may find it more

appealing to agree to the less stringent requirements of the RCEP. The RCEP contains only six

non-tariff issues while the TPP has 20.148 There is significant incentive to be the first to finalize

negotiations and conclude the domestic ratification process. Although both sides are presumably

aware of this source of competition, the TPP nations will need work to maintain the agreement’s

attractiveness to potential partners.

Climate Change and Environmental Sustainability

The Trans-Pacific Partnership’s relationship with the environment presents myriad

complexities that impact the agreement’s implementation, as well as environmental

sustainability. This reciprocal relationship presents a number of challenges and opportunities

which must be addressed through the TPP’s environment chapter. Environmental degradation

and climate change may prove to be the most important geopolitical issue over the next century.

The greenhouse effect – gasses such as CO2 and methane trap solar energy causing the planet to

warm – is the principle behind climate change. Climate scientists overwhelmingly agree that

146 Ibid, 95.

147 Human Rights Watch, “Indonesia: Undo Legacy of Rights Abuse.” (2015)

https://www.hrw.org/news/2015/01/29/indonesia-undo-legacy-rights-abuse, Accessed July 30, 2015. 148

Jeffrey Wilson, “Mega-Regional Trade Deals in the Asia-Pacific: Choosing Between the TPP and RCEP”,

Journal of Contemporary Asia, 45.2 (2015): 345-353

http://www.tandfonline.com/doi/pdf/10.1080/00472336.2014.956138, Accessed July 30, 2015.

5 2

human carbon emissions impact the earth’s warming temperature. Without significant protection

and regulation, the TPP agreement can easily add to the already staggering carbon emission

levels. Failing to secure comprehensive regulations and protections should not be acceptable to

negotiations. The potential for catastrophic conditions is too great for anything less than binding

commitments from all parties.

In spite of the stark scientific consensus acknowledging the looming threat, early drafts

leaked to the public were met with rancor. The 2014 leaked chapter was criticized by numerous

organizations for lacking basic protections.149 Groups like the Sierra Club and the World

Wildlife Fund lambasted the chapter for what appeared to be rollbacks on levels of national

commitment, recourse for violations, and fishery protections.150 If the environmental chapter

lacks heft, countering increased environmental erosion will be very difficult. Rising sea levels,

extreme weather conditions, and increased natural disasters threaten the TPP’s relevancy. In

particular, if the TPP fails to promote ecological health, Asia-Pacific trade may become less

feasible. ASEAN partners may look inward to reduce transportation costs, while simultaneously

protecting the environment. The partnership needs to address environmental erosion in a

meaningful and binding manner. If not, implications suggest the regional accord may lose

relevancy.

In light of critics’ grievances about the potential for increased environmental destruction,

the TPP is uniquely positioned to positively impact conservation. Illegally harvested timber is a

primary source of deforestation in the world. Recent changes in U.S. federal law requires evidence

on the country of origin and wood type before timber imports are permitted.151 Through these

requirements and increased communications with local agents, the importer has a strong

149 Sierra Club, (2014).

150 Ibid.

151 See Lacey Act 18 USC 42-43, http://www.fws.gov/le/pdffiles/Lacey.pdf, Accessed June 26, 2015.

5 3

incentive to harvest legal wood.152 By stopping illegal timber before importation, market demand

and the path of entry are greatly reduced for illegal loggers. An additional area of opportunity is

fisheries and the regulation of fish stocks. Each nation approaches this issue differently due to

disparate domestic commercial industries. For example, Indonesia is the second largest producer

of marine catches with 5,420,247 tons, growing by 27% from 2003-2012. During the same time

period, Chile’s production fell by 28.8% totaling 2,572,881 tones. The TPP partners face a host of

domestic issues regarding fish production such as Japan’s progressive reduction in its commercial

fleet and the Deepwater Horizon contamination in the United States.153 The various domestic

issues pertaining to commercial fishing will present obstacles to a cohesive chapter, yet still, the

TPP partners have a unique opportunity to form binding provisions enabling sustainable

commercial fishing.

Ultimately, if the Trans-Pacific Partnership is to fulfill its comprehensive and ambitious

agenda, it will ultimately need to do so in light of the three aforementioned geopolitical

conditions. Each condition offers unique obstacles and opportunities. Chinese ascendancy is a

direct threat to American hegemony. All parties will need to determine a path of cooperation or

hostility. Moreover, in order for the TPP to retain its viability it must remain attractive despite

alternative possibilities such as RCEP. Depending on various national perspectives, the breadth

and depth of the agreement will either alienate or attract potential suitors. Finally, climate change

presents potentially the most devastating geopolitical condition to Asia-Pacific integration.

International trade and the environment are intricately entwined; no longer can business and

economic enterprise ignore the ecological order. The TPP must address environmental wellness

152 Joshua Meltzer, "The Trans-Pacific Partnership Agreement, the environment and climate change." Trade

Liberalisation and International Co-operation: A Legal Analysis of the Trans-Pacific Partnership Agreement (2014)

http://www.brookings.edu/research/papers/2013/09/trans-pacific-partnership-meltzer, Accessed July 22, 2015, 153

Food and Agriculture Organization of the United Nations (2014) “The State of World Fisheries and Aquaculture”

http://www.fao.org/3/a-i3720e.pdf, Accessed April 17, 2015.

5 4

in a comprehensive, binding agreement which promotes and incentivizes alternative forms of

energy. The unsustainability of a global order run on fossil fuels is abundantly clear. These three

geopolitical conditions will have significant influence over future levels of Asia-Pacific

integration under the Trans-Pacific Partnership.

5 5

Chapter V: Conclusion

The Trans-Pacific Partnership is on the verge of expanding international intellectual

property and investor-state regimes beyond existing conditions. Developing in a climate of

precipitously increasing free trade agreements, the TPP is not merely another trade accord. Its

ambition in unconventional trade areas highlights particular goals and motivations of the

drafters. With the United States maintaining economic, military, and strategic position, the

international regimes are designed to preserve U.S. hegemonic power. Issues such as intellectual

property and ISDS bolsters U.S. areas of specialization, while concurrently binding allies to an

international accord favoring U.S. faculties. The United States’ efforts to expand the intellectual

property regime comes by way of broadening concepts such as copyrights patentability, and

enforcement. Additionally, U.S. negotiators seek to strengthen the ISDS regime through an

environment of increased utilization of the mechanism, binding additional nations to

international treaty obligations, and widening areas subject to adjudication.

Despite not having access to the final text, public information and scholarly analysis

reveal that the TPP will collide with existing geopolitical conditions. If the accord is to retain

longevity as an international force, the accord will need to address this reality. Chinese

ascendancy since the end of the 20th century, presents unique challenges to the U.S. hegemonic

order. The Chinese seek to challenge American hegemony, as well as bolster its economic

primacy and military capabilities. Moreover, international trade accords such as the RCEP,

which can also be understood as a counterhegemonic initiative, will compete directly with the

TPP. Asia-Pacific partners must cooperate to achieve the accord’s goals in order to provide a

competitive advantage over alternative agreements. Lastly, the cataclysmic potential of climate

change puts the future of international trade in peril. Without meaningful regulation of carbon

emissions, as well as harnessing clean technology to enable international trade, trade deals

among such geographically distant nations may not be sustainable. The TPP partners must

engage each of these geopolitical conditions or risk having Asian-Pacific integration derailed.

56

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